Global Bitcoin mining company Bitfarms Ltd. (Nasdaq/TSX: BITF) announced that it is adopting a shareholder rights plan, according to a recent press release. This strategic move was made in response to an unsolicited takeover bid by Riot Platforms, Inc. and aims to protect the interests of Bitfarms shareholders.
Shareholder Rights Plan
The Bitfarms Board of Directors unanimously approved the adoption of the Shareholder Rights Plan (“Rights Plan”) on June 10, 2024. This plan has been implemented to maintain the integrity of the Company’s current strategic alternatives review process. Outside Director Special Committee. The review process is considering a variety of options, including continued execution of the Company’s business plan, a business combination, or a possible sale of the Company.
Riot Platforms has been actively increasing its stake in Bitfarms and currently holds 47,830,440 shares of common stock, representing 11.62% of the company’s outstanding voting shares. Despite an initial offer to acquire all outstanding shares on the grounds that it undervalued the company, Riot continued to acquire additional shares, raising concerns among Bitfarms’ board of directors.
Response to Riot’s Actions
Riot’s actions led Bitfarms to adopt a rights plan to ensure the board has sufficient time to explore and negotiate alternative strategies that could deliver better value for shareholders. The plan prevents any shareholder from acquiring more than 15% of Bitfarms’ common stock without exercising their rights, which would allow other shareholders to purchase additional shares at a significant discount.
The Rights Plan does not prevent Riot from making unsolicited takeover bids under Canadian securities laws, nor does it restrict Riot from nominating candidates or soliciting proxies. It is designed to give the board a fair opportunity to consider all alternatives and maximize shareholder value.
Implementation details
One right will be issued for each share of outstanding common stock on June 20, 2024, and each right will be exercisable if an individual or group acquires 15% or more of Bitfarms’ common stock before September 10, 2024, and 20% thereafter. The plan will remain in effect until approved by shareholders within the next six months.
Adoption of the rights plan is also subject to approval by the Toronto Stock Exchange (TSX). The TSX may postpone consideration until it is confident that the appropriate securities commissions will not intervene. The Board is not aware of any other pending or threatened takeover bids.
About Bitfarms Ltd.
Founded in 2017, Bitfarms is a global Bitcoin mining company that operates 12 mining facilities across four countries: Canada, the United States, Paraguay, and Argentina. The company focuses on using environmentally friendly hydroelectric power and is committed to sustainable energy practices. Bitfarms develops and manages its facilities in-house, ensuring best-in-class operational performance and uptime.
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