Bitcoin miner Bitfarms has adopted a shareholder rights plan 10 days after its Annual General and Special Meeting. The plan would allow Riot Platforms’ hostile takeover attempt to proceed, but only under highly constrained circumstances.
The shareholder rights plan stipulates that, if a person (in the legal sense) and associated persons should become 15% holders of Canada-based Bitfarms’ shares by Sept. 20 and then increase their share to 20% without board approval, other shareholders could “purchase common shares at a significant discount to the market price at that time.”
Bitfarms and Riot playing hardball
After that process, a takeover bid would be possible, as allowed under Canadian law. However, the bidder’s share would be diluted in the meantime.
According to Riot, the Bitfarms’ board had “rejected [Riot’s April takeover proposal] without engaging in substantive dialogue.” Bitfarms’ version of the same process stated that Bitfarms “welcomed” Riot’s interest in the company, but believed Riot’s offer undervalued company shares. But Riot changed its tactics and reversed its own proposal:
“Disappointingly, Riot declined to participate in the [standstill] process [it had proposed] and instead has continued to acquire common shares of the Company in the open market […] in an attempt to undermine the integrity of the process and thwart the interest of third parties.”
Riot scores strategic points
Riot had increased its share in Bitfarms from 3.61% to 11.62% by the time of the shareholders meeting.
Related: Bitcoin halving impacts miner Riot’s revenue by 43% despite new facility
Bitfarms co-founders Emiliano Grodzki failed to retain his board seat in the election held at the shareholder meeting. Riot had questioned whether Grodzki and Nicholas Bonta were acting in “the best interests of all shareholders.”
Bonta was reelected board chair by a wide margin, but Bitfarms said in the announcement of the election results that, “Independence concerns expressed by certain proxy advisory firms […] are believed to have led to Mr. Grodzki not being re-elected.”
Riot Platforms had intended to requisition an additional shareholders meeting to follow the May 31 Bitfarms’ meeting to add more members to the board. In a June 10 statement announcing the plan, Bitfarms called the proposed meeting part of Riot Platforms’ “efforts to circumvent and frustrate” its board’s review process to consider the sale of the company.