Bitfarms adopted a shareholder rights plan to protect its strategic review process from a takeover attempt by Riot Platforms.
Toronto-based Bitcoin mining company Bitfarms announced in a June 10 press release that its board of directors unanimously approved the adoption of a shareholder rights plan to protect the integrity of its strategic alternatives review process.
The rights plan (commonly referred to as the “poison pill”) aims to protect the interests of Bitfarms shareholders by preventing potential hostile takeover attempts. The move comes in response to recent actions by Colorado-based Bitcoin mining company Riot Platforms.
“The rights plan was adopted to preserve the integrity of the previously announced strategic alternatives review process and is in the best interest of all Bitfarms shareholders.”
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Riot, which currently holds 47,830,440 shares of Bitfarms’ common stock, equivalent to 11.62% of Bitfarms’ stock, recently made a proposal to acquire all of Bitfarms’ issued common stock for $950 million and said it would convene an extraordinary shareholders’ meeting to avoid this. expressed his/her intention. Review process.
In response, Bitfarms’ special committee determined that Bitfarms’ proposal “substantially underestimates the company and its growth prospects.” The Toronto-based company said the special committee welcomed Riot’s interest in the company, but added that Riot declined to participate in the strategic alternatives review process.
“(…) (Riot) continued to acquire the Company’s common stock on the open market in an attempt to undermine the integrity of the process, acquiring an additional 8.01% of the Company’s common stock beginning on April 22, 2024. “An act that interferes with the interests of a third party.”
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The Rights Plan establishes a pre-execution equity accumulation threshold of 15%, designed to prevent immediate threats to the strategic review process. From June 20, one right is granted per share of common stock, and can be exercised if, without following the plan, you acquire more than 15% of the issued common stock before September 10 and 20% thereafter with a specific related person. rule.
The rights plan must be approved by shareholders and the Toronto Stock Exchange within six months, although approval may be delayed until the relevant securities commission is satisfied.