Riot Platforms Proposes To Acquire Bitfarms For $2.30 Per Share
Riot Platforms, Inc (NASDAQ: RIOT) announced a proposal to acquire all outstanding shares of Bitfarms Ltd (NASDAQ/TSX: BITF) at $2.30 per share.
This acquisition aims to create the largest publicly listed Bitcoin miner in the world, according to Riot Platforms.
The proposed acquisition price represents a 24% premium to Bitfarms’ one-month volume-weighted average share price as of May 24, 2024, and a 20% premium to Bitfarms’ share price on April 19, 2024.
The overall value of the proposal is approximately $950 million in total equity value.
Strategic Rationale for the Acquisition
The proposed acquisition is intended to offer significant benefits to both Riot and Bitfarms shareholders. The combination would:
Create the largest Bitcoin miner globally, with approximately 1 GW of current power capacity and 19.6 EH/s of current self-mining capacity.
By year-end, the combined entity aims for up to 1.5 GW of power capacity and 52 EH/s of self-mining capacity.
Provide geographic diversification, with 15 facilities across the United States, Canada, Paraguay, and Argentina. The combined company would have up to 2.2 GW of total power capacity when fully developed.
Leverage Riot’s strong financial profile, including more than $700 million in cash and 8,872 unencumbered Bitcoin, to drive future growth for Bitfarms.
Governance Concerns and Shareholder Actions
The proposal was privately delivered to the Bitfarms Board on April 22, 2024, but was rejected without substantive dialogue.
New allegations in a lawsuit by Bitfarms’ recently terminated CEO raise questions about the Board’s commitment to shareholder interests.
Riot plans to requisition a Special Meeting of Bitfarms’ shareholders to add new, independent directors to the Board, following Bitfarms’ Annual General and Special Meeting on May 31, 2024.
Benjamin Yi, Executive Chairman of Riot, stated, “A combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally. We are confident that Bitfarms’ shareholders will see this proposal as a more attractive alternative than its standalone trajectory.”
Jason Les, CEO of Riot, expressed concerns about Bitfarms’ Board governance, noting the abrupt termination of the CEO without a transition plan and allegations against Board members. Les emphasized the need for governance changes to maximize shareholder value.
Proposal Details and Future Steps
The proposal includes a mix of cash and Riot common stock, resulting in Bitfarms’ shareholders owning up to approximately 17% of the combined company.
The Proposal is non-binding and subject to customary conditions, including entering into a definitive transaction agreement.
Citi is serving as the financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Davies Ward Phillips & Vineberg LLP are serving as legal advisors to Riot for this transaction.
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