Canadian Tribunal Strikes Down Bitfarms’ Poison Pill Against Riot Platforms
By:W, LeahOn Wednesday, Bitcoin mining firm Riot Platforms announced that a Canadian tribunal had invalidated Bitfarms’ “poison pill” defense against its acquisition attempt. Consequently, Bitfarms is no longer authorized to employ this strategy to thwart a potential hostile takeover.
The poison pill provision, which would have been triggered upon the acquisition of 15% of Bitfarms’ shares by any entity, has now been deactivated.
“This ruling from the tribunal in favor of Riot’s application is a win for all Bitfarms shareholders,” Jason Les, Riot CEO, said in a statement. The approach shows Bitfarms’ flawed governance and the directors’ efforts to entrench themselves, he added.
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Bitfarms Adopts Second ‘Poison Pill’ after Canadian Tribunal Terminates First
However, in reaction to the tribunal’s ruling, Bitfarms has implemented a second poison pill defense. The new ‘poison pill’, known as the shareholders rights plan, will trigger when against “creepy” bids accumulating more than 20 per cent of the Bitfarms’ common shares, the Canadian company said. The threshold was earlier set at 15 per cent.
Bitfarms announced that the newly implemented plan will remain in effect for a period of six months. The company further elaborated that a predefined trigger mechanism would enable current stockholders to acquire shares at a substantial discount to the prevailing market price, thereby potentially diluting the ownership stake of the acquiring entity.
Riot Platforms’ $950M Bitfarms Bid Rejected, Citing Undervaluation
It comes after Bitfarms rejected Riot’s $950m acquisition offer, arguing that it undervalued the company. To deter a hostile takeover, Bitfarms implemented a shareholder rights plan. Notably, Riot’s proposed acquisition valued Bitfarms at $2.30 per share, marking a 24% premium over its recent average share price.
Nonetheless, the board of directors at Bitfarms determined that this offer was inadequate and not aligned with the best interests of its shareholders.
Riot Intensifies Acquisition Efforts
Bitfarms took defensive measure, aiming to safeguard Bitfarms’ strategic review process and ensure thorough evaluation of potential offers.Despite Bitfarms’ defensive maneuvers aimed at deterring hostile takeovers by making it financially unfeasible for any entity to acquire over 15% of the company’s shares without board approval, Riot remains steadfast in its pursuit of acquiring Bitfarms.
Riot, currently holding a 14.9% stake in Bitfarms, has escalated its efforts by launching a dedicated website that addresses corporate governance concerns within Bitfarms and outlines its vision for a revamped board structure. This strategic move underscores Riot’s determination and a more aggressive stance in its acquisition endeavors.
Concurrently, Riot has bolstered its operations by acquiring Block Mining for $92.5 million on July 24th. This acquisition, financed through a mix of cash and stock, significantly enhances Riot’s mining capabilities and expands its geographical footprint. Additionally, Block Mining stands to receive potential compensation tied to future expansion plans, contingent upon securing new power supply agreements, further bolstering Riot’s long-term growth prospects.
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