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Riot Platforms buys 9.25% stake in Bitfarms after takeover bid rejected

Riot Platforms is increasing its involvement in Bitfarms, which may indicate a long-term investment strategy and a desire to cooperate.

Date: 2024-05-29 Author: Marek Stiller
Riot Platforms buys 9.25% stake in Bitfarms after takeover bid rejected

According to a Riot Platforms press release published on May 28, the Bitcoin mining company’s $950 million offer to acquire all of Bitfarms’ outstanding shares was rejected by Bitfarms’ board of directors. Nevertheless, Riot proceeded to acquire a 9.25% stake in Bitfarms , making it the largest shareholder.

Riot Platforms becomes largest shareholder

Riot proposed a buyout price of $2.30 per share, a 24% premium over Bitfarms’ monthly volume-weighted average share price as of May 24. In addition, this reflected a 20% premium over Bitfarms’ share price on April 19, the last trading day before Riot’s original proposal.

The consideration offered to Bitfarms shareholders under the proposal included a combination of cash and Riot common stock, potentially giving Bitfarms shareholders ownership of up to 17% of the combined company.

“This cash and stock offering will provide Bitfarms shareholders with a significant premium and immediate cash value,” the announcement reads. “And the significant potential for future value creation through participation in a financially and commercially stronger company.”

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The company said the privately submitted proposal was rejected without substantive dialogue. In addition, a lawsuit filed by the recently fired Bitfarms CEO has raised concerns about whether some directors are acting in the best interests of all shareholders.

“As a result, Riot believes it is necessary to disclose its proposal directly to Bitfarms shareholders,” the announcement reads.

Concerns about Bitfarms’ leadership

After Bitfarms’ annual general and special meeting on May 31, 2024, Riot plans to convene an extraordinary meeting of Bitfarms shareholders to introduce new independent directors to the Bitfarms board.

“The combination of Bitfarms and Riot would create the world’s leading and largest listed Bitcoin mining company, with a geographically diversified business and well positioned for long-term growth,” said Riot Executive Chairman Benjamin Yi.

Riot CEO Jason Les expressed concern over the recent dismissal of Bitfarms CEO Nicolas Bonta, suggesting that Nicolas Bonta and Emiliano Grodzki, both founders of the company, may “not be acting in the best interests of all Bitfarms shareholders.”

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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