Riot Platforms Seeks Hostile Takeover of Bitfarms Amid Shareholder Dispute
By: Eliza Bennet
Riot Platforms recently announced a proposal to acquire Bitfarms for US$2.30 per share, aiming to establish the world's largest publicly listed Bitcoin miner. Riot, which currently holds a 9.25% stake in Bitfarms, proposed adding new independent directors to Bitfarms' board. The acquisition offer includes a 24% premium to Bitfarms' one-month volume-weighted average share price and a 20% premium to its share price on April 19, 2024. However, Bitfarms' board swiftly dismissed the offer, leading to tensions between the two companies.
According to Riot CEO Jason Les, the merger would yield substantial strategic and financial benefits, creating a vertically integrated Bitcoin mining company with approximately 1 GW of power capacity and 19.6 EH/s of current self-mining capacity. This capacity could expand to 1.5 GW and 52 EH/s by year-end, positioning the combined entity as the global leader in Bitcoin mining. Riot's enhanced geographic diversification would include 15 facilities across the United States, Canada, Paraguay, and Argentina, totaling up to 2.2 GW of power capacity when fully developed.
Riot emphasized its strong financial profile, including over $700 million in cash and minimal corporate debt, which could bolster Bitfarms' growth and improve its public equity market access. Executive Chairman Benjamin Yi highlighted the strategic alignment and growth potential of the merger, while expressing disappointment at Bitfarms' decision to reject the offer without substantive dialogue.
The proposal has been criticized by Bitfarms' board, who are alleged to not be acting in the best interests of shareholders. Riot's financial advisor is Citi, with legal advisors including Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Davies Ward Phillips & Vineberg LLP. The non-binding proposal remains subject to customary conditions, but Riot remains committed to pursuing this acquisition to enhance operational and financial capabilities and create a leading Bitcoin mining company.
