Bitfarms will take a “poison pill” in connection with the attempted takeover of Riot
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Bitfarms will take a “poison pill” in connection with the attempted takeover of Riot

(Reuters) – Bitcoin mining company Bitfarms said on Monday it has approved taking a “poison pill” to fend off a potential hostile takeover attempt by rival Riot Platforms.

The move comes days after Riot Platforms revealed it had built a 12% stake in Bitfarms amid a takeover attempt.

Riot initially made a private proposal to buy Bitfarms in April. The proposal was rejected by Bitfarms’ board after it said the offer “significantly undervalues” the company.

Colorado-based Riot went public in May with its proposal to buy the bitcoin miner for about $950 million and said it intended to seek a special shareholder meeting to add independent directors to Bitfarms’ board.

US-listed Bitfarms shares fell 2.5% in pre-open trading.

Under Bitfarm’s plan, if an entity accumulates more than 15% of Bitfarms’ shares after June 20 and by September 10, the company will issue new shares, diluting the entity’s shares.

After September 10, the threshold will be lowered to 20% as long as any takeover attempt meets certain conditions.

Shareholder rights plans, known as “poison pills,” are used by corporate boards to thwart hostile takeover bids.

Bitfarms said the shareholder rights plan seeks to maintain the integrity of its previously announced strategic alternatives review process.

The bitcoin miner began reviewing strategic alternatives last month after receiving Riot’s proposal. The review takes into account a possible merger or sale of the company.

The rights plan is subject to ratification by shareholders within six months of its adoption, otherwise it will expire, Bitfarms said.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Tasim Zahid)