Core Scientific rejects CoreWeave’s $1 billion acquisition offer
Core Scientific (CORZ) rejected CoreWeave’s “unsolicited” $1 billion acquisition offer. This is because we believe the offer is significantly undervalued and not in the best interests of shareholders. The $5.75 per share offer comes shortly after the two companies signed a series of 12-year contracts with Core Scientific to provide 200 MW of infrastructure to support CoreWeave’s high-performance computing (HPC) AI services.
Per Core Scientific’s board of directors, in consultation with independent financial and legal advisors, concluded that the proposal does not reflect the company’s growth prospects and long-term value creation potential. They also used the term in the title of their press release to make it clear that the offer was an “unsolicited” one.
Core Scientific plans to work to fulfill its previously announced agreement with CoreWeave, which is expected to generate more than $3.5 billion in cumulative revenue. The deal marks a strategic shift for Core Scientific, traditionally known for its Bitcoin mining operations, as it diversifies into the AI data center space.
CORZ stock was trading around $4.84 before the partnership was announced and has since risen to around $7.15. CoreWeave’s offer of $5.75 per share is significantly higher than Core Scientific’s stock price before the partnership was announced, but below its current price. This indicates that the board believes the stock price has not been overly inflated by the new deal.
CoreWeave will fund all capital investments required for infrastructure modifications (estimated at $300 million), which will be credited against hosting payments until fully repaid. The partnership is expected to generate approximately $290 million in average annual revenue, strengthening Core Scientific’s earnings power and increasing shareholder value.
The company’s decision to reject the acquisition offer highlights its confidence in Bitcoin mining and the unique strategic benefits of the CoreWeave partnership. CEO Adam Sullivan emphasized that demand for high-power sites continues to outpace supply and that Core Scientific can better meet customer needs than greenfield data center projects. This partnership will allow Core Scientific to balance its portfolio between Bitcoin mining and alternative compute hosting to maximize cash flow and minimize risk while maintaining significant exposure to Bitcoin’s potential upside.
Core Scientific’s AI infrastructure transition coincides with the recent Bitcoin halving event. This has reduced miner rewards and put pressure on mining companies to find alternative revenue streams. The company’s financial recovery after going through a 13-month bankruptcy restructuring process has been bolstered by significant increases in Bitcoin price and hash rate. Core Scientific’s stock, which resumed trading on Nasdaq in January, has seen significant gains, reflecting investor confidence in the company’s strategic direction.
The partnership with CoreWeave builds on the successful history of collaboration between the two companies since 2019. Earlier this year, Core Scientific delivered 16 MW of HPC hosting capacity to CoreWeave ahead of schedule in its new Austin data center. The ongoing collaboration demonstrates the strategic importance of AI and cloud computing in Core Scientific’s future plans.
