Riot Ends Bitfarms Takeover Bid, Settles for 19.9% Stake
Riot Platforms ends its bid to acquire Bitfarms, settling for a 19.9% stake as both companies shift focus to their own strategies after the agreement.
Riot Platforms and Bitfarms have reached a settlement, ending Riot’s takeover attempt of the Canadian crypto mining firm. As part of this agreement, Riot will not pursue an immediate acquisition but will retain its 19.9% stake in Bitfarms, signaling a strategic shift for both companies. The settlement was officially announced on September 23, 2024.
As part of the agreement, Riot has withdrawn its request for a special meeting of Bitfarms shareholders. In return, Bitfarms has made several board-level changes to support its ongoing strategic review. One of the key changes is the appointment of Amy Freedman to the Board, replacing Andrés Finkielsztain, who stepped down. Freedman, known for her corporate governance expertise, will play an active role in Bitfarms’ Governance and Nominating Committee and Compensation Committee. Additionally, she may join special committees of independent directors as needed.
Riot's involvement in Bitfarms has been under scrutiny since its unsolicited $950 million acquisition offer in May, followed by increased share purchases. On June 20, Bitfarms responded by implementing a shareholder rights plan, commonly called a “poison pill”, designed to prevent any party, including Riot, from acquiring more than 15% of the company’s shares before a set deadline. This move allowed Bitfarms to protect shareholder interests while exploring other strategic options, such as mergers or sales.
Riot’s actions raised concerns within Bitfarms, particularly among its Special Committee of Independent Directors. They argued that Riot’s continued acquisition of shares threatened to undermine the integrity of Bitfarms’ strategic review process. The committee felt that Riot's offer undervalued the company, prompting it to take defensive measures to ensure that shareholder value was protected.
Despite the settlement, Riot still holds a significant stake in Bitfarms and may reconsider its position in the future. As outlined in its early warning report, Riot could return with new proposals, depending on Bitfarms' performance and market conditions. For now, however, both companies are focused on their individual strategies and seem to have reached a temporary truce.
This development marks a shift in Riot’s approach, opting for a wait-and-see strategy rather than pushing for immediate control. Bitfarms, on the other hand, has secured more time to navigate its future options without the immediate pressure of a takeover.
