Bitfarms Implements Shareholder Rights Plan

Bitcoin mining company Bitfarms has taken a strategic step to safeguard its interests against a potential hostile takeover bid initiated by Riot Platforms. The move comes just 10 days after Bitfarms' Annual General and Special Meeting, indicating a proactive stance by the company.

Shareholder Rights Plan Overview

Bitfarms' recently adopted shareholder rights plan aims to regulate any attempt by individuals and associated entities to acquire a substantial stake in the company without board approval. According to the plan, if a person and related entities accumulate 15% ownership of Bitfarms' shares by September 20 and escalate it to 20% without the board's consent, other shareholders will have the opportunity to purchase common shares at a discounted rate compared to the market value at that time.

Maneuvering Amidst Strategy and Tension

The implementation of the shareholder rights plan sets the stage for a potential takeover bid, as permitted by Canadian legislation. However, any bidder seeking control of Bitfarms would face share dilution during the process.

Riot Platforms, the entity attempting the takeover, expressed disappointment over Bitfarms' initial response to its proposal. While Bitfarms acknowledged Riot's interest in the company, it deemed the offer as undervaluing the company's shares. This disagreement in valuation led to a shift in strategies by Riot Platforms, altering the dynamics of the potential acquisition.

Key Developments and Tactical Moves

Riot Platforms significantly increased its stake in Bitfarms from 3.61% to 11.62% before the shareholders' meeting. This shift in ownership dynamics raised questions about the alignment of Bitfarms' co-founders, particularly Emiliano Grodzki, with the broader shareholder interests.

During the shareholder meeting, Grodzki lost his board seat, reflecting underlying tensions and differing viewpoints within Bitfarms. Despite Nicholas Bonta's reelection as board chair with a considerable majority, issues of independence raised by proxy advisory firms influenced the election results.

Ongoing Struggle for Control

Riot Platforms' intention to convene an additional shareholders meeting post the May 31 session highlights the ongoing struggle for control between the two entities. Bitfarms viewed this move as an attempt by Riot Platforms to circumvent the established governance processes and potentially impede the company's sale consideration.

With strategic maneuvers and conflicting interests at play, the Bitfarms-Riot Platforms saga underscores the complexities and power dynamics involved in corporate control battles.