Bitfarms Poison Pill Plan Was Deployed To Prevent Riot’s Monopoly

Key Points:

• Bitfarms poison pill strategy has been adopted to prevent a hostile takeover by Riot Platforms.
• Bitfarms rejected Riot’s nearly $1 billion acquisition offer despite Riot’s proposal offering a 24% premium on shares.

Bitcoin miner Bitfarms has adopted a shareholder rights plan, known as a “poison pill,” to fend off a possible hostile takeover by competitor Riot Blockchain.

Bitfarms Poison Pill Deployed to Block Riot Platforms’ Takeover Attempt

Bitfarms poison pill secured the board’s approval to prevent any entity from gaining “creeping control,” safeguarding the company’s strategic review process and protecting the best interests of its shareholders.

The move came after Riot Blockchain disclosed that it had acquired a 12% stake in Bitfarms, escalating its attempts at a hostile takeover. Riot became the largest shareholder in Bitfarms at the end of May by purchasing a 9.25% stake and later increased it by purchasing another 1.5 million shares on June 5.

According to a Reuters report, among other things, Bitfarms poison pill plan states that it will issue new shares if any entity acquires more than 15% of its stake between June 20 and September 10, thereby diluting the shareholding. The threshold will increase to 20% after September 10, provided a successful takeover is under certain terms.

Riot had laid the groundwork for its bid for Bitfarms in April by presenting a nearly $1 billion private offer to buy the company for $2.30 per share. The bid offered a 24% premium on the per-share one-month weighted average price. However, Bitfarms’ board rejected the offer, stating it significantly undervalued the company.

Potential Merger Could Form One of the Largest Bitcoin Mining Companies

Bitfarm poison pill strategy underscores its commitment to maintaining control and ensuring that any future moves align with the interests of its shareholders. Unfazed, Riot planned to propose a special shareholder meeting to present new independent directors to the Bitfarms board.

If these two companies merge, they will become the world’s largest bitcoin mining outfit, with over 1 gigawatt of power capacity and 19.6 exahash per second of self-mining capacity. The joint company will operate 15 facilities across the United States, Canada, Paraguay, and Argentina, with an estimated total power capacity of up to 2.2 gigawatts when fully developed.