Key Takeaways
- The poison pill plan will dilute shares of any entity acquiring more than 15% of Bitfarms’ stake between June 20 and September 10.
- Riot revealed that it had purchased around six million common shares of Bitfarms in three separate trades
Riot Platforms has come out strongly against Bitfarms’ recent adoption of a poison pill strategy to thwart a potential takeover. The move, according to Riot, is “shareholder unfriendly” and highlights Bitfarms’ lack of solid corporate governance standards.
In a statement, Riot revealed it had privately urged Bitfarms to remove its chairman and interim CEO, Nicolas Bonta, and to add at least two new independent directors to its board. Riot’s CEO, Jason Les, strongly opposes Bitfarms’ plan to prevent any single entity from acquiring more than a 15% stake in the company, a strategy that would impede Riot’s acquisition efforts.
Riot’s opposition to Bitfarms’ strategy was detailed in a June 11 filing with the United States Securities and Exchange Commission. The filing revealed that Riot had purchased roughly six million common shares of Bitfarms across three separate trades, accumulating a 13.1% stake in the company. The shares, worth more than $111 million at the time of purchase, are part of Riot’s broader strategy to acquire Bitfarms.
Riot Platforms, which already owns 11.62% of Bitfarms, made an unsolicited bid in April to acquire all shares of the company for about $950 million. However, Bitfarms rebuffed the offer, claiming it significantly undervalued the company. In response, Bitfarms announced a shareholder rights plan on June 10, suggesting a poison pill strategy to defend against Riot’s takeover attempt.
The poison pill plan aims to dilute the value of shares held by any entity that acquires more than a 15% stake in Bitfarms after June 20 and up to September 10. This defensive measure restricts acquisitions beyond the 15% threshold without complying with “Permitted Bid” provisions, ensuring fair consideration of all strategic alternatives. Riot criticized the plan, stating it “is in direct conflict with established legal and governance standards.”
Jason Les emphasized Riot’s commitment to addressing corporate governance issues at Bitfarms, stating, “We will continue to push to address the serious corporate governance issues at Bitfarms and ensure that shareholders have a say on the company’s path forward.”
Bitfarms has however countered Riot’s allegations, arguing that Riot’s interests are not aligned with those of its shareholders. Bitfarms further accused Riot of attacking its board and corporate governance to push a “low-ball bid” and disrupt the strategic alternatives review process.
Last month, Riot, offered to acquire Bitfarm for $950 million, a price reflective of a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24.
