As a researcher with experience in mergers and acquisitions in the tech industry, I believe that Riot’s acquisition of Bitfarms faces significant hurdles based on the current rejection by Bitfarm’s board and the insufficient premium offered. The quick rejection without substantive dialogue raises concerns about the motivations of Bitfarms’ founders and their commitment to acting in the best interests of all shareholders.
According to analysts at H.C. Wainwright, the proposed acquisition of Bitfarms by Riot may be met with opposition due to the disapproval of Bitfarm’s board and inadequate premiums offered.
Based on Bitfarm’s board rejecting Riot’s opening bid and the insufficient premium in the proposal unlikely to gain approval from shareholders, analysts at H.C. Wainwright expressed a low likelihood that Riot would successfully acquire Bitfarms.
In a recent research note, analyst Mike Colonnese expressed his perspective that the proposed premium is insufficient to persuade Bitfarm shareholders to approve the deal due to the significant discount in share value, as he sees it. Additionally, it’s important to mention that this proposal is non-binding and no formal agreement has been reached at this point.
At the upcoming annual shareholder meeting on Friday, Riot intends to call for a exclusive session to propose the addition of new unbiased board members. Over the subsequent four months, Riot plans to put forth these nominees in pursuit of gaining approval from the other directors for the acquisition. (Paraphrased)
The directors at Riot are in favor of the acquisition and have given their approval through a unanimous vote. With sufficient funds at its disposal, the company is prepared to carry out the deal. As of April 30th, Riot held more than $700 million in cash and approximately 8,872 unencumbered Bitcoins (BTC) on its balance sheet.
Acquisition offer
On May 28th, Riot Blockchain Company made public its intent to buy out Bitfarms Ltd. (BITF) through a proposal. The deal valued each BITF share at $2.3, adding up to a total purchase price of approximately $950 million.
Riot’s proposal offers a blend of cash and common stock, which could be advantageous for Bitfarms shareholders. Under this plan, they would have the opportunity to hold up to approximately 17% of the combined company, thus securing a significant stake in a bigger and more varied business entity.
Prior proposals
As a researcher looking into this situation, I can tell you that in the month of April, Riot’s offer to buy Bitfarm was declined. The specifics of any potential deal, including its financial and legal aspects, would require approval from both Bitfarm’s and Riot’s boards of directors before moving forward.
The rejection happened quickly and “without engaging in substantive dialogue.”
“At Riot, we expressed our worry back then that the Bitfarms board members, specifically Nicolas Bonta and Emiliano Grodzki, might not have been prioritizing the needs of all Bitfarms stockholders.”
Riot’s current price is $10.34, and it has a “Buy” rating and a price target of $17.00 per share.
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2024-05-29 17:16