As a long-term crypto investor with experience in following the Bitcoin mining industry, I believe that Bitfarms’ decision to adopt a shareholder rights plan was necessary to protect the interests of its shareholders and ensure a fair process for evaluating strategic alternatives. The actions taken by Riot Platforms, attempting to acquire a significant stake in Bitfarms without participating in the review process, raised concerns about potential undervaluation and disregard for other interested parties.
Bitfarms has implemented a shareholder rights plan as a protective measure against takeover efforts by Riot Platforms during the company’s ongoing strategic review process.
A Toronto-based Bitcoin mining firm, Bitfarms, revealed in a June 10th press announcement that its board of directors had collectively agreed to implement a shareholder rights plan, designed to protect the fairness of their ongoing strategic review process.
Bitfarms’ Rights Plan, also known as a “poison pill,” is designed to safeguard shareholder interests and thwart potential unwanted takeover bids, instigated by Riot Platforms, a Bitcoin mining firm based in Colorado.
“To maintain the authenticity of our earlier stated strategic review, we’re implementing the Shareholders’ Rights Plan. This move benefits all shareholders of Bitfarms.”
Bitfarms
Riot, with approximately 11.62% ownership (47,830,440 common shares) in Bitfarms, has proposed purchasing all of Bitfarms’ common shares for $950 million without undergoing a thorough review process. To accomplish this, Riot intends to call for a special shareholders meeting.
In reaction, Bitfarms’ deliberation committee concluded that Bitfarms’ proposal represented a substantial undervaluation of the company and its expansion possibilities. Based in Toronto, the corporation noted that they appreciated Riot’s attention towards their business but declined to involve Riot in their strategic review process.
Since April 22, 2024, Riot has purchased over 8.01% more of the company’s common shares through open market transactions. This move is aimed at compromising the process and hindering the intentions of external parties.
Bitfarms
The Rights Plan establishes a threshold of accumulating a 15% share ownership before triggering actions, intended to safeguard the strategic review process from imminent disruption. As of June 20, each common shareholder will receive one right. These rights become exercisable if a person, together with related parties, obtains 15% or more of the issued common shares before September 10, or 20% thereafter, without adhering to the plan’s stipulations.
As a crypto investor, I understand that the Rights Plan, which is an important protective measure for the company’s shareholders, needs to be ratified by us within the next six months. This means we need to approve it at the upcoming shareholder meeting or through a postal ballot. However, this process might not end there. The Toronto Stock Exchange also requires its approval, and their review could potentially add more time to the acceptance timeline. Lastly, the securities commission, which ensures compliance with securities laws, may need to sign off on the plan as well, further delaying the final acceptance.
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2024-06-10 14:38