Riot Platforms (NASDAQ:RIOT)) made an unsolicited $950 million bid to acquire Bitfarms Ltd. (NASDAQ:BITF), a small Bitcoin miner that rejected a previous acquisition offer last month.
Riot offered Bitfarms $2.30 per share in cash and stock, a 20% premium to the price Bitfarms traded prior to Riot’s initial offer in April, which was filed privately with the board of directors.
Riot has accumulated a 9.25% stake in Bitfarms, making it the largest shareholder, according to a statement on Tuesday that confirmed a previous report by Bloomberg News.
Riot announced plans to require a shareholder vote to add new directors to Bitfarms’ board, citing Bitfarms’ recent leadership changes as evidence of corporate governance issues.
The bid is part of a trend of consolidation in the cryptocurrency mining sector triggered by the Bitcoin code update known as the “halving,” which is expected to significantly reduce miners’ profits. Large mining companies are seeking acquisitions to expand their operations and adapt to the industry’s evolving economics.
If successful, the merger would create the world’s largest Bitcoin miner based on expected growth in computing power, joining major players such as Marathon Digital Holdings Inc. (NASDAQ:MARA) in Riot’s Bitcoin production capacity. will greatly improve.) and CleanSpark Inc. (NASDAQ:CLSK).
Bitfarms shares rose 3.3% in Toronto on Monday to C$2.86, or about $2.10 USD, valuing the company at about $750 million. Riot’s stock rose 4% in New York on Friday, giving it a market capitalization of about $3 billion.
management change
The deal follows Bitfarms firing interim CEO Geoffrey Morphy, who filed a lawsuit seeking $27 million in damages for breach of contract.
According to Riot, Riot’s proposal presented on April 22 was rejected by the Bitfarms board of directors without any substantive discussion. Under the proposed terms, Bitfarms shareholders would own approximately 17% of the combined company.
Riot plans to convene an extraordinary general meeting of shareholders to consider the appointment of new outside directors after the Bitfarms regular general meeting on May 31.
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