Bitfarms Ltd. (Nasdaq/TSX: BITF), a leading global Bitcoin mining company, recently announced the adoption of a shareholder rights plan (poison pill) in response to a hostile takeover bid by competitor Riot Platforms, Inc. This strategic move aims to protect Bitfarms’ shareholders and ensure they receive fair value in the event of a potential acquisition.
Understanding the Shareholder Rights Plan
The Board of Directors unanimously approved the Rights Plan on June 10, 2024. This plan safeguards the integrity of Bitfarms’ ongoing strategic alternatives review process, led by a dedicated committee of independent directors. The review explores various options, including continuing current operations, pursuing a merger, or even a complete company sale.
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Riot Platforms’ Acquisition Attempt
Riot Platforms has been aggressively acquiring Bitfarms shares, currently holding a significant stake of 11.62% (approximately 47.8 million shares). While Riot’s initial proposal to acquire all outstanding shares was deemed undervalued by Bitfarms’ board, their continued share purchases have raised concerns.
Protecting Shareholder Value
The Rights Plan empowers Bitfarms’ board by granting them additional time to negotiate and explore strategic alternatives that maximize shareholder value. This plan kicks in if any entity acquires 15% or more of Bitfarms’ shares before September 10, 2024 (or 20% after that date). Upon activation, existing shareholders gain the right to purchase additional shares at a significant discount, effectively diluting the acquiring entity’s ownership stake.
Key Points to Remember
- The Rights Plan doesn’t prevent Riot from making a formal takeover bid as per Canadian securities regulations.
- Riot can still nominate board members and solicit shareholder votes (proxy solicitation).
- The plan’s objective is to create a level playing field for the board to explore all options and secure the best outcome for shareholders.
Implementation Timeline
Each Bitfarms common share will be awarded one right starting June 20, 2024. These rights become exercisable if a single entity or group acquires the aforementioned ownership thresholds within the specified timeframe. The Rights Plan will remain active for the next six months, subject to shareholder ratification and approval by the Toronto Stock Exchange (TSX).
About Bitfarms Ltd.
Established in 2017, Bitfarms is a global leader in Bitcoin mining with a network of 12 facilities spanning four countries – Canada, the United States, Paraguay, and Argentina. The company prioritizes sustainability by utilizing environmentally friendly hydroelectric power for its operations. Bitfarms’ in-house development and management of its mining facilities ensure exceptional performance and uptime.
