Bitfarms, a global Bitcoin mining company, confirmed on May 28 that it received and rejected an acquisition proposal from Riot Platforms on April 22, 2024.

The proposal, offering US$2.30 per Bitfarms common share in cash and Riot common stock, was evaluated by a Special Committee of the Bitfarms Board, consisting solely of independent directors.

Bitfarms Special Committee’s Evaluation

Bitcoin mining firm Bitfarms explained its decision to reject Riot Platforms’ acquisition proposal in a statement.

According to a recent Bloomberg report, Riot’s offer includes a mix of cash and common stock, valuing Bitfarms at approximately $950 million in equity. This represents a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24, 2024.

The proposed acquisition was said to combine cash and Riot common stock, resulting in Bitfarms shareholders owning up to 17% of the merged entity. Riot stated that this proposal offers Bitfarms shareholders substantial immediate value and potential for future growth within a financially robust company led by a proven management team.

Riot Proposes to Acquire Bitfarms for US$2.30 Per Share to Create the World’s Largest Publicly Listed Bitcoin Miner.

Read the full press release here: https://t.co/SnBijrL3i7

For disclaimers, please visit: https://t.co/6RQFSK9MKb.

— Riot Platforms, Inc. (@RiotPlatforms) May 28, 2024

The initial proposal was privately submitted to the Bitfarms Board of Directors on April 22, 2024, but was rejected without substantive discussion. Following this, Riot has decided to make the proposal public, citing new allegations from a lawsuit filed by Bitfarms’ recently terminated CEO, which questions the commitment of certain directors to shareholder interests.

Bitfarms set up a Special Committee Board, consisting exclusively of independent directors, however, which reviewed Riot’s proposal and concluded that it significantly “undervalued the company and its future growth prospects.” To facilitate meaningful discussions, the Special Committee requested customary confidentiality and non-solicitation agreements from Riot but did not receive a response.

The special committee is now assessing the company’s future direction.

“Having received additional unsolicited expressions of interest, with each additional party executing a customary non-disclosure agreement, the special committee is conducting a thorough strategic alternatives review to ensure it achieves maximum shareholder value,” Bitfarms stated.

The review could lead to various outcomes, including continuing with the current business plan, entering a strategic business combination or transaction, or selling the company.

Bitfarms Faces Acquisition Bid from Riot Amid Management Turmoil and CEO Lawsuit

Bitfarms believes that continuing to execute its growth plan will maximize shareholder value. The company’s review and ongoing operational improvements are intended to position Bitfarms for sustained growth and enhanced market position within the Bitcoin mining industry.

The acquisition offer comes at a tumultuous time for Bitfarms, which is undergoing management changes. Following the departure of Geoffrey Morphy, the company is in the process of finding a new CEO. Initially, Morphy would remain with the company while searching for his successor.

On May 10, Morphy sued Bitfarms for breach of contract, wrongful dismissal, and damages amounting to $27 million. Consequently, he was dismissed on May 13, and chairman and co-founder Nicolas Bonta was appointed interim CEO.

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