Riot Platforms proposed a $950M cash and stock buyout of Bitfarms, offering a 24% premium, after its initial offer was rebuffed.
Bitfarms has been acquired by Bitcoin miner Riot Platforms for a substantial premium over its current share price. Riot extended an offer to the board of its smaller Canadian competitor on April 22. Following the rejection of that offer, Riot is now disclosing its intentions.
With a 9.25% stake, Riot, based in Colorado, is already the largest shareholder of Bitfarms.
A combined cash and common stock offering of approximately $950 million in equity value, or a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24, 2024, has been made to shareholders. A shareholder of Bitfarms would possess approximately 17% of the merged company.
“would provide Bitfarms’ shareholders with […] potential for future value creation through participation in a financially and commercially stronger company with a well-defined strategy, led by an established and proven management team.”
Riot said in a statement.As Bitfarms searches for a new CEO, the organization’s leadership is undergoing a transition. In a statement dated March 25, the organization declared its search.
In that statement, former president and CEO Geoffrey Morphy conveyed his “utmost confidence that the management team will achieve our growth objectives by 2024.” Bitfarms initially had the intention of retaining Morphy during the process of finding a replacement.
On May 10, Morphy filed a $27 million lawsuit against the company, alleging breach of contract, unlawful termination, and damages. On May 13, Bitfarms terminated his employment and appointed co-founder and chairman Nicolas Bonta to succeed him. Riot stated,
“New allegations in a lawsuit brought by Bitfarms’ recently terminated CEO, if accurate, raise serious questions about whether certain directors are committed to acting in the best interests of all shareholders.”
Riot subsequently identified Emiliano Grodzki and Bonta, co-founders, as the directors of the issue. It stated that it would request a special Bitfarms shareholders meeting following the organization’s Annual General and Special Meeting on May 31 to “additionally appoint independent, highly qualified directors to the Bitfarms Board.”
In 2023, Bitfarms reported unsatisfactory year-over-year earnings. It initiated an expensive technological upgrade in anticipation of the Bitcoin halving. Bitfarms was anticipated to perform well by analysts following the halving.
Nonetheless, April earnings were 29% lower than the same month last year. In the initial quarter of 2024, Riot achieved a net income growth of 131%, culminating in a total of $211 million. Since then, no financial information has been disclosed.
A merged company would have the most capacity of any publicly traded Bitcoin miner, according to Riot, with “approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity; by the end of the year, it could reach 1.5 GW of power capacity and 52 EH/s of self-mining capacity.”
