Bitcoin Miner Bitfarms Fights Takeover Riots with Poison Pill Plan
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Bitcoin Miner Bitfarms Fights Takeover Riots with Poison Pill Plan

Bitcoin mining company Bitfarms has implemented a shareholder rights plan to protect the interests of its shareholders in the face of an unwelcome takeover bid from fellow Bitcoin mining company Riot Platforms.

This move follows Riot Platforms’ increased stake in Bitfarms and their offer to acquire all outstanding shares.

Strategic defense of Bitfarms amid hostile takeover attempts

Known as the “poison pill” strategy, Bitfarms aims to prevent hostile takeovers by making such deals too expensive for the buyer. This tactic ensures that Bitfarms can continue the strategic review process without disruption, exploring options such as business combinations, strategic transactions, or potential sales.

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“Riot’s actions, including the proposal received on April 22, 2024 and subsequent market purchases intended to increase its shareholding, were found by the Special Committee of Independent Directors to have undervalued Bitfarms. “This committee believes that the continued acquisition of Riot shares disrupts the integrity of the strategic review process and may hinder the maximization of shareholder value,” the company said.

From June 20, 2024, the rights plan covers all new common shares and is triggered if an entity acquires more than 15% of Bitfarms shares by September 10, 2024, or 20% after that date, without complying with the plan. This rights plan allows Riot to make a takeover bid that complies with Canadian securities laws. It also protects existing shareholders by allowing them to purchase additional shares at a discount if the buyer exceeds certain thresholds.

Implementation of the plan is subject to approval by both Bitfarms shareholders and the Toronto Stock Exchange. Currently, Riot’s bid is the only known takeover attempt.

BeInCrypto previously reported that Riot Platforms made an unsolicited offer worth $950 million to acquire Bitfarms in May. Riot privately offered $2.30 per share in cash and stock in April, about 20% above Bitfarms’ pre-offering market price. As of June 5, Riot currently holds 47,830,440 shares, representing approximately 11.62% of Bitfarms’ issued and outstanding shares.

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Bitfarms (BITF) Price Performance.
BITF Price Performance. Source: Google Finance

Following the announcement of the rights plan, the Nasdaq share price of Bitfarms (BITF) has fallen by 4.17% in the last 24 hours, while the share price of Riot Platforms (RIOT) has risen by 1.8%. However, over the last 30 days, Bitfarms’ share price has increased by 44.65% compared to Riot’s increase of 4.16%.

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