As a seasoned researcher with extensive experience in the cryptocurrency and corporate finance industries, I have closely followed the ongoing saga between Bitfarms and Riot. I must admit that I was intrigued when Bitfarms announced its “poison pill” strategy to thwart Riot’s takeover attempt. However, after reviewing the latest ruling by the Ontario Capital Markets Tribunal, I believe that this was a short-sighted move on Bitfarms’ part.
A Canadian cryptocurrency mining company, Bitfarms, has been instructed to abandon its defensive strategy known as a “poison pill” in the face of a takeover bid by competitor Riot, following a ruling by the Ontario Capital Markets Tribunal on July 24. The tribunal’s decision resulted in a cease trade order prohibiting Bitfarms from offering further shares for sale to thwart the $950 million buyout proposal.
Bitfarms Adopts a Defensive Strategy
Bitfarms employed the “poison pill” defense on June 13 to thwart Riot’s persistent takeover advances. This method enables a corporation to offer new shares at a reduced price to existing shareholders, thereby diluting stock value and increasing the financial burden and unattractiveness of an acquisition for the prospective buyer.
Bitfarms implemented this approach to ward off a takeover attempt by Riot. Nevertheless, Riot contested the action, leading to the dispute being brought before the Ontario Capital Markets Tribunal.
During the hearing, Riot expressed their concern that Bitfarms’ “poison pill” strategy was unjustly hindering their genuine attempt to acquire the company and wasn’t aligned with the best interests of Bitfarms’ shareholders, including me.
Riot Wins against Bitfarms
Upon careful examination of the circumstances at hand, I, as a member of the Tribunal, concurred with Riot’s perspective and subsequently ordered Bitfarms to cease their defensive share issuance without delay.
“Riot announced on Wednesday that they were triumphant following the Tribunal’s decision in their favor regarding their application. They expressed gratitude for the prompt and decisive action taken by the Tribunal to eliminate the Poison Pill, benefiting all Bitfarms shareholders.”
In May, Riot initiated a takeover attempt by proposing to buy up all of Bitfarms’ remaining shares for $2.30 each. This equated to an approximate total value of $950 million. However, Bitfarms’ board of directors dismissed this proposal, labeling it as undervalued.
Despite being turned down, Riot persisted in their efforts to acquire Bitfarms. They intend to present this issue to Bitfarms’ shareholders for consideration.
In June, I came across news that Riot had made an announcement. They were planning to convene a gathering of Bitfarms shareholders with the intention of proposing the addition of several independent directors to their board.
A Special Shareholders Meeting
After making the announcement, the company revealed that it had put forth the names of John Delaney, Amy Freedman, and Ralph Goehring for consideration as new, independent members on the board.
These nominees, who have been clearly stated by the company to be unconnected to Riot and Bitfarms, possess impressive qualifications that could potentially put an end to the protracted takeover dispute between the two corporations.
Following Bitfarms’ decision to abandon its defensive tactic, a special shareholders gathering has been arranged for October 29. Riot is optimistic that its three proposed board members will attend and join the existing Bitfarms directors during this event.
At present, Bitfarms has sold 14% of its shares to Riot. In June, Riot acquired more shares, amounting to approximately 57.62 million units, expanding its ownership further.
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2024-07-25 11:45