Riot Platforms and Bitfarms have reached an agreement that ends Riot’s attempt to take over the Canadian cryptocurrency mining company.
On 23 September, both companies issued a joint statement outlining their agreement, which they see as a way to simplify Riot’s long takeover efforts.
Although Riot will not push for a full acquisition right now, it will keep its 19.9% stake in Bitfarms. This deal marks a significant shift in strategy for both companies.
The settlement was announced ahead of a Special Meeting for Bitfarms shareholders, scheduled for 6 November.
Following the announcement, the stock prices of both companies saw a boost, with market observers expecting more activity in related stocks.
The deal also brings changes to Bitfarms’ Board, which the companies say is a key step forward.
Riot Platforms is a major cryptocurrency mining company based in the United States, known for its large-scale Bitcoin mining operations and focus on blockchain technology.
Bitfarms, a Canadian crypto mining firm, operates multiple data centres across North and South America, primarily mining Bitcoin using sustainable energy sources. Both companies play significant roles in the cryptocurrency mining industry.
Changes to the board and strategic review
As part of the settlement, Riot has agreed to withdraw its request for a special shareholder meeting. In return, Bitfarms has made changes at the Board level to support its ongoing strategic review.
One major change is the appointment of Amy Freedman to the Board. Freedman replaces Andrés Finkielsztain, who stepped down.
Freedman, who has experience in corporate governance, will play an important role in Bitfarms’ Governance and Nominating Committee and its Compensation Committee. She could also be involved in special committees of independent directors if necessary.
At the upcoming Special Meeting, Bitfarms shareholders will vote on several key issues. These include expanding the Board from five to six members and electing an independent director for the new position.
Shareholders will also vote on a shareholder rights plan that was introduced on 24 July 2024. Riot has agreed to support these measures.
Riot’s takeover attempt
Riot Platforms’ involvement in Bitfarms has been closely watched ever since Riot made an unsolicited $950 million offer to acquire Bitfarms in May.
After making the offer, Riot began increasing its stake in the company by purchasing more shares.
In response to Riot’s actions, Bitfarms introduced a shareholder rights plan, commonly known as a “poison pill”, on 20 June. This plan was designed to stop any party, including Riot, from buying more than 15% of Bitfarms’ shares before a certain deadline.
The goal of this plan was to protect Bitfarms’ shareholders and give the company time to consider other strategic options, such as mergers or selling the company.
Riot’s continued purchase of Bitfarms shares raised concerns among Bitfarms’ leadership, particularly its Special Committee of Independent Directors. They argued that Riot’s actions could disrupt the company’s review of its strategic options.
The committee also believed that Riot’s $950 million offer undervalued Bitfarms, prompting them to take defensive steps to protect the interests of their shareholders.
Although Riot and Bitfarms have now reached a settlement, Riot still holds a significant stake in Bitfarms. Riot could potentially reconsider its approach in the future.
In its early warning report, Riot suggested it might make new offers depending on how Bitfarms performs and market conditions evolve.
A temporary pause in the takeover battle
The attempted takeover by Riot has been marked by tension between the two companies. Riot’s $950 million offer was called unsolicited, and Bitfarms viewed it as an attempt to gain control.
Bitfarms ultimately rejected the offer, describing Riot’s approach as “unconstructive”. Riot also tried to increase its influence by purchasing more shares, but the companies have now reached a temporary resolution.
In a related move, Bitfarms is reportedly looking to acquire Stronghold Digital Mining in a deal valued at $164 million.
As of now, stocks for both Riot and Bitfarms have improved following news of the settlement. Bitfarms shares (BITF) are currently trading at $2.05, showing a 2.5% increase over the last day.
The settlement marks a shift in Riot’s strategy. Instead of continuing to push for control, Riot seems to be taking a wait-and-see approach for now. Bitfarms, meanwhile, has secured more time to explore its options without the immediate pressure of a takeover.
Both companies appear to be focused on their own plans for the future, even though the possibility of a takeover could still arise later.
