Bitcoin Bitcoin
-3.46%
Miner Bitfarms has adopted a new “poison pill” strategy to prevent a takeover of the company by rival Riot Platforms following a court ruling on the latter’s initial shareholder rights plan.
Riot announced on Wednesday that its application to the Ontario Capital Markets Tribunal to halt the original “poison pill” plan implemented by the Bitfarms board was successful, effective immediately, with hearings scheduled for July 22 and July 23.
“The Court’s ruling in favor of Riot’s application is a victory for all Bitfarms shareholders,” said Riot CEO Jason Les. “The adoption of the off-market poison pill is yet another example of the breakdown in corporate governance that plagues Bitfarms and the ongoing attempts by Bitfarms directors to entrench themselves. We appreciate the Court’s swift and decisive action to remove the poison pill.”
In June, Bitfarms adopted the first “poison pill” approach, stating that if any entity acquires more than 15% of Bitfarms, the company will issue new shares to dilute that entity’s stake.
But on Wednesday, Bitfarms announced that its board of directors had unanimously approved the adoption of a new shareholder rights plan, this time involving the accumulation of at least 20% of the company’s common stock over a six-month period.
“The court has ruled to halt Bitfarms’ rights plan transaction, which effectively terminates the rights plan. The rights plan was designed to preserve the integrity of the independent special committee’s strategic alternatives review process in light of Riot’s opportunistic acquisition attempt,” said Brian Howlett, a Bitfarms board member. “In response to this decision, the Bitfarms board has adopted a new rights plan to ensure that the interests of all shareholders are protected.”
However, the new plan still needs to be approved by the Toronto Stock Exchange, and Riot could again apply to the court to have the plan struck down.
Riot’s takeover attempt
Riot Platforms attempted to acquire Bitfarms for about $950 million in April. Last month, Riot said it was ready to discuss a potential acquisition with the reconstituted Bitfarms board, but was withdrawing its previous offer to acquire the company for $2.30 per share “given the lack of meaningful participation from the current board.”
Since that deal fell through, Riot has steadily been buying up shares in the company, becoming its largest shareholder. As things stand, Riot currently owns about 60 million shares, or 14.9%, of Bitfarms.
Earlier this month, Bitfarms set the date for an extraordinary general meeting of shareholders to vote on board restructuring for October 29, following Riot Platforms’ request for a meeting on June 24.
Bitfarms shareholders will vote at the special meeting to remove Chairman and Interim CEO Nicolas Bonta and Director Andrés Finkielsztain. Bitfarms appointed Ben Gagnon as its new CEO on July 8, but he is not currently on the board and therefore not subject to removal. They will also vote on the removal of Fanny Philip, who recently filled the vacancy left by co-founder Emiliano Grodzki after he was removed from the board at the annual shareholders meeting.
Riot’s three candidates for board membership are John Delaney, a government and public administration veteran with experience in both the public and private sectors; Amy Freedman, a corporate governance and capital markets professional with over 25 years of experience; and Ralph Goehring, a finance and energy veteran with extensive experience as a CFO of publicly traded companies.
Riot Platforms has a market cap of $3.4 billion, while Bitfarms has a market cap of around $1.1 billion.
Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information on the cryptocurrency industry. Below are the current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.