Bitfarms, a Bitcoin mining company, has implemented a shareholder rights plan just 10 days after its Annual General and Special Meeting. This plan is designed to allow Riot Platforms to potentially proceed with a hostile takeover, but only under specific conditions.
Under the shareholder rights plan, if an individual and their associates acquire 15% of Bitfarms’ shares by September 20 and increase their ownership to 20% without board approval, other shareholders will have the opportunity to buy common shares at a discounted price compared to the market value at that time.
Bitfarms and Riot are engaging in a strategic standoff. If the conditions of the shareholder rights plan are met, a takeover bid could take place in accordance with Canadian law, but the bidder’s shares would be diluted in the process.
Riot had initially proposed a takeover of Bitfarms in April, which was rejected by Bitfarms’ board without much discussion. Bitfarms acknowledged Riot’s interest in the company but felt that the offer undervalued its shares. However, Riot has since changed its approach and increased its stake in Bitfarms from 3.61% to 11.62% by the time of the shareholders meeting.
During the election held at the shareholder meeting, Bitfarms co-founder Emiliano Grodzki lost his board seat, with Riot questioning his and Nicholas Bonta’s actions in the best interests of all shareholders. Bonta was reelected as board chair by a significant margin, but Bitfarms mentioned that concerns about independence from certain proxy advisory firms may have influenced Grodzki’s loss.
Riot Platforms had planned to request another shareholders meeting after the May 31 Bitfarms meeting to add more board members. Bitfarms criticized this move as an attempt by Riot Platforms to interfere with the board’s process of reviewing the potential sale of the company.
Source: D.R. Lewis
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