Riot CEO claims Bitfarms is not acting in the best interests of shareholders due to rejection of acquisition
Riot Platforms announced an offer to acquire Bitfarms for $2.30 per share. This acquisition will create the world’s largest publicly traded Bitcoin mining company and deliver significant value to shareholders. Riot has already acquired a 9.25% stake in Bitfarms, becoming the largest shareholder, and plans to request a general shareholders’ meeting of Bitfarms to add new outside directors to the board of directors.
The offering represents a 24% premium to Bitfarms’ one-month volume-weighted average share price as of May 24, 2024, and a 20% premium to its share price as of April 19, 2024. The consideration consists of cash and Riot common stock. , potentially allowing Bitfarms shareholders to own about 17% of the combined company. This proposal was delivered privately on April 22, but was rejected by the Bitfarms board of directors without any substantive dialogue.
Combining the two companies will create significant strategic and financial benefits for Riot, including a vertically integrated Bitcoin mining company with approximately 1 GW of current power capacity and 19.6 EH/s of its own mining capacity, expanding to 1.5 GW and 52 EH/s. I claim that I will do it. Until the end of the year. This scale will position the combined entity as the largest Bitcoin mining company globally.
The combination will enhance geographic diversification with 15 facilities across the United States, Canada, Paraguay and Argentina, capable of delivering up to 2.2 GW of power capacity when fully developed. Riot’s strong financial profile, including over $700 million in cash and minimal corporate debt, will support Bitfarms’ growth plans and improve its access to public equity markets.
Riot Chairman Benjamin Yi expressed disappointment at Bitfarms’ swift rejection of the offer, emphasizing its strategic fit and growth potential. CEO Jason Les has raised concerns about Bitfarms’ governance, citing the CEO’s abrupt dismissal and related allegations as signs of trouble.
“We are deeply concerned that the founders of the Bitfarms Board of Directors, Nicolas Bonta and Emiliano Grodzki, may not be acting in the best interests of all Bitfarms shareholders. “The sudden resignation of the Bitfarms CEO without a transition plan in place (…) raises serious governance issues.”
The proposal, which was unanimously approved by Riot’s board of directors, is non-binding and subject to customary conditions. Riot’s financial advisor is Citi and its legal advisors are Paul, Weiss, Rifkind, Wharton & Garrison LLP and Davies Ward Phillips & Vineberg LLP. Riot claims it will continue to pursue this acquisition with the goal of creating a leading Bitcoin mining company with improved operational and financial capabilities.
