July 24, 2024
Bitfarms Shareholder Rights Plan
Bitcoin News

Bitfarms Implements Defensive Plan Amid Riot’s Takeover Bid

Bitfarms and Riot at Odds

Bitcoin mining company Bitfarms has introduced a shareholder rights plan following its recent annual general and special meetings. This plan allows Riot Platforms’ hostile takeover attempt to proceed, but only under very specific and restrictive conditions.

The plan specifies that if any person or group accumulates 15% of Bitfarms’ shares by September 20 and then increases their share to 20% without board approval, other shareholders can purchase additional common shares at a substantial discount. This measure aims to prevent any unauthorized accumulation of shares by making it financially unfavorable.

Bitfarms and Riot Playing Hardball

Under this arrangement, a takeover bid by Riot could still proceed, but the process would involve significant dilution of the bidder’s shares. Riot has expressed dissatisfaction with the Bitfarms board, accusing it of rejecting Riot’s takeover proposal without proper discussion. Conversely, Bitfarms maintains that it welcomed Riot’s interest but found the offer undervalued the company.

Riot has since altered its approach, continuing to acquire Bitfarms shares on the open market, which Bitfarms claims undermines the process and discourages third-party interests.

Riot Scores Strategic Points

Riot significantly increased its stake in Bitfarms, growing from 3.61% to 11.62% by the time of the recent shareholder meeting. This increased influence contributed to Bitfarms co-founder Emiliano Grodzki losing his board seat, although Nicholas Bonta was re-elected as board chair. Bitfarms noted that concerns over independence raised by proxy advisory firms likely influenced Grodzki’s failure to be re-elected.

Riot Platforms planned to request an additional shareholder meeting after the May 31 meeting to propose adding more board members. Bitfarms, in a June 10 statement, described this move as part of Riot’s strategy to bypass and disrupt the board’s review process concerning the potential sale of the company.

Future Assumptions

The conflict between Bitfarms and Riot Platforms highlights the strategic maneuvers in the corporate world, where shareholder rights plans and hostile takeovers become tools in a larger game of corporate control. As Bitfarms and Riot continue their battle, the outcome will likely shape the future of both companies in the highly competitive Bitcoin mining industry.

Image by tirachardz on Freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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