Canadian tribunal halts Bitfarms‘ poison pill strategy to block Riot’s takeover attempt.
Bitfarm’s attempted “poison pill” strategy, which was designed to impede an acquisition attempt by Riot Platforms, a rival mining firm, has been terminated by a Canadian tribunal.
Riot confirmed in a July 24 statement that the Ontario Capital Markets Tribunal had issued a cease trade order on Bitfarms’ poison pill plan, which terminated the strategy immediately.
Since June 13, Bitfarms has been contesting Riot Platforms’ $950 million buyout offer, contending that it unjustly undervalues the company. To avert the coup, the organization implemented the “rights plan,” which is a poison pill strategy.
Companies seeking to avert hostile takeovers frequently implement a poison pill strategy. The value of the shares for the acquirer is diminished due to the strategy, which involves existing shareholders purchasing additional shares at significantly discounted prices.
If any entity acquired more than 15% of the company’s outstanding shares before Sept. 10, Bitfarm’s rights plan, which is now moribund, would have required the issuance of new shares to other existing shareholders, thereby diluting the entity’s ownership share.
In a statement, Riot Platforms CEO Jason Les declared, “The Tribunal’s decision in favor of Riot’s application is a victory for all Bitfarms shareholders.”
“The adoption of the off-market Poison Pill is yet another illustration of the broken corporate governance that afflicts Bitfarms and of the ongoing endeavors by the Bitfarms directors to establish themselves,” Les continued.
Riot asserts that its three director nominees, John Delaney, Amy Freedman, and Ralph Goehring, must be elected to Bitfarm’s Board at the upcoming shareholder meeting scheduled for Oct. 29.
In response to Riot’s attempt to “opportunistically” acquire the company, Brian Howlett, the main director of Bitfarms’ board, stated that the rights plan was implemented to “preserve the integrity” of alternative takeover processes.
“The Bitfarms Board has adopted the New Rights Plan to safeguard the interests of all shareholders in response to this decision,” Howlett stated.
In four countries—Canada, the United States, Paraguay, and Argentina—Bitfarms operates 12 Bitcoin mining facilities.
After filing a lawsuit against the mining firm, Bitfarms announced in May that its former CEO, Geoffrey Morphy, would resign.
Nicolas Bonta has been serving as the interim president and CEO of the company until a replacement for Morphy is selected.
Les urged the board to remove Bonta, asserting that he “bears direct responsibility for [Bitfarms’] poor corporate governance practices.”
