Cryptonews Blockchain News

Canadian Tribunal Strikes Down Bitfarms’ Poison Pill Against Riot Platforms

Bitfarms Riot Platforms

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

About Author

Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

Author Profile

Last updated:

July 25, 2024

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Bitcoin miner Riot Platforms said Wednesday that a Canadian tribunal terminated Bitfarms’ “poison pill” strategy to block its acquisition. It means Bitfarms can no longer use this tactic to prevent a hostile takeover.

The poison pill, which would have been activated if an entity bought 15% of Bitfarms’ shares, is now disabled.

“This ruling from the tribunal in favor of Riot’s application is a win for all Bitfarms shareholders,” Jason Les, Riot CEO, said in a statement. The approach shows Bitfarms’ flawed governance and the directors’ efforts to entrench themselves, he added.

However, Bitfarms has now implemented a second “poison pill” in response to the tribunal’s decision. This defensive measure will be activated if any entity accumulates more than 20% of Bitfarms’ shares without board approval.

Riot Platforms’ $950M Bitfarms Bid Rejected, Citing Undervaluation

It comes after Bitfarms rejected Riot’s $950m acquisition offer, arguing that it undervalued the company. To deter a hostile takeover, Bitfarms implemented a shareholder rights plan. Notably, Riot’s proposed acquisition valued Bitfarms at $2.30 per share. This represented a 24% premium over the recent average share price.

However, Bitfarms’ board of directors concluded that this offer was insufficient and not in the best interests of its shareholders.

Riot Steps Up Takeover Efforts

Bitfarms’ defensive measures aimed to discourage hostile takeovers. It made it financially prohibitive for any entity to acquire more than 15% of the company’s shares without board approval. Specifically, the company aimed to protect its strategic review process and ensure that potential offers were subjected to evaluation.

Yet, Riot still intends to acquire Bitfarms.

Riot, holding a 14.9% stake in Bitfarms, recently launched a website highlighting corporate governance concerns at Bitfarms and outlining its plans for board restructuring. This move signifies a more aggressive approach in its pursuit to acquire Bitfarms.

Separately, Riot expanded its operations, acquiring Block Mining for $92.5m on July 24. The deal, financed with a combination of cash and stock, significantly increases Riot’s mining capacity and geographic reach. Block Mining has the potential to earn additional compensation based on future expansion plans, contingent upon securing new power supply agreements.