Bitfarms, a prominent Bitcoin mining company based in Toronto, has implemented a shareholder rights plan, commonly known as a “poison pill,” to defend against a takeover attempt by Riot Platforms. The move is aimed at protecting the company’s strategic review process and safeguarding shareholder interests.
Shareholder Rights Plan to Block Hostile Takeover
On June 10, Bitfarms announced that its board of directors had unanimously approved the adoption of a shareholder rights plan. This plan is designed to prevent any hostile takeover attempts and ensure the integrity of the company’s strategic alternatives review process. The decision comes in response to aggressive actions by Riot Platforms, a Colorado-based Bitcoin mining firm.
“The Rights Plan is being adopted to preserve the integrity of our previously announced strategic alternatives review process and is in the best interests of all Bitfarms’ shareholders,” stated Bitfarms.
Riot Platforms’ Takeover Attempts
Riot Platforms currently holds 47,830,440 common shares of Bitfarms, representing 11.62% of the company’s total shares. Riot recently proposed acquiring all of Bitfarms’ issued and outstanding common shares for $950 million and expressed intentions to call a special shareholders’ meeting to bypass the strategic review process.
In response, Bitfarms’ special committee assessed Riot’s offer and concluded that it “significantly undervalues the company and its growth prospects.” While the committee acknowledged Riot’s interest, they noted that Riot has continued to purchase common shares in the open market, increasing its stake by 8.01% since April 22, 2024. This move is seen as an attempt to undermine the strategic review process and deter other potential interests.
Details of the Poison Pill Strategy
The Rights Plan sets a threshold of 15% share accumulation before it is triggered, designed to prevent any immediate threats to the strategic review process. Starting June 20, one right will be issued per common share, becoming exercisable if any person, along with certain related persons, acquires 15% or more of the outstanding common shares before September 10, or 20% thereafter, without adhering to the plan’s rules.
To be fully enacted, the Rights Plan must be ratified by shareholders within six months and approved by the Toronto Stock Exchange. The acceptance might be delayed until the relevant securities commission is satisfied.
Conclusion
Bitfarms’ adoption of the poison pill strategy underscores its commitment to protecting shareholder interests and maintaining control over its strategic direction. As Riot Platforms continues its aggressive acquisition efforts, Bitfarms aims to ensure that any potential deals are in the best interest of its shareholders and the company’s long-term growth prospects.
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