Riot Platforms Ends Takeover Bid As Staking Settlement Reached

Riot Platforms has ended its attempt to acquire Bitfarms, settling instead for a 19.9% ownership stake as both companies redirect their focus to their own strategies following the agreement. This settlement, announced on September 23rd, 2024, means Riot will not pursue an immediate acquisition.

The Calm Before The Storm

As part of the deal, Riot has retracted its request for a special meeting of Bitfarms shareholders. In exchange, Bitfarms has implemented several board-level changes to support its ongoing strategic review. Notably, Amy Freedman has been appointed to the Board, taking over for Andrés Finkielsztain, who has resigned. Freedman, recognized for her expertise in corporate governance, will actively participate in the Bitfarms Governance and Nominating Committee and Compensation Committee, and may also join special committees of independent directors as needed.

The interest by Riot Platforms in Bitfarms has been closely watched since its unsolicited $950 million acquisition proposal in May, followed by increased share purchases. In response, Bitfarms adopted a shareholder rights plan, often referred to as a poison pill, on June 20th, preventing any entity, including Riot, when it came to acquiring over 15% of company shares before a specified deadline. This strategy was aimed at safeguarding shareholder interests while considering other potential strategic options like mergers or sales.

Wait And See

Concerns arose within Bitfarms regarding Riot, particularly among its Special Committee of Independent Directors. They contended that the ongoing share acquisitions could jeopardize the integrity of the strategic review process which Bitfarms had meticulously crafted, arguing that Riot was undervaluing the company. This led the committee to adopt defensive measures to protect shareholder value.

Although the settlement has taken place, Riot continues to hold a significant stake in Bitfarms and may reevaluate its position in the future. According to its early warning report, Riot could present new proposals based on how Bitfarms performs as well as broader market conditions. For the time being, both companies are concentrating on their respective strategies and have seemingly established a temporary truce.