Bitcoin mining company Bitfarms Ltd. is adopting a “poison pill” shareholder rights plan in response to an unsolicited acquisition offer from larger rival Riot Platforms Inc.
The poison pill strategy is designed to prevent corporate takeovers by making acquisition costs too high for the acquiring company. According to the terms of Bitfarms’ plan, if a company acquires more than a 15% stake by September 10, Bitfarms will issue new shares to existing shareholders, diluting the stake in the company pursuing the hostile takeover. Bit Farm.
Riot Platforms made an unsolicited $950 million offer in May to acquire Bitfarms Ltd. after the company rejected Riot’s takeover bid last month. The Bitfarms Board of Directors considered this offer to be a significant underestimation of the company and its growth prospects.
Last April, Riot offered $2.30 per share in cash and stock for Bitfarms, a 20% premium to the company’s pre-offer stock price.
According to Bitfarms, Riot currently holds 47,830,440 shares, equivalent to about 12% of shares outstanding. A Riot representative did not immediately respond to a request for comment.
On Monday, Bitfarms shares fell 4.2% to $2.30, while Riot shares rose 1.8% to $9.90. Year to date, both stocks are down about 21% and 36%, respectively.
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