Bitfarms Ltd. (Nasdaq/TSX: BITF), a global Bitcoin mining company, has announced the adoption of a shareholder rights plan, according to a recent press release. This strategic move comes as a response to an unsolicited takeover bid by Riot Platforms, Inc. and aims to protect the interests of Bitfarms’ shareholders.
Shareholder Rights Plan
The Board of Directors of Bitfarms unanimously approved the adoption of the shareholder rights plan (“Rights Plan”) on June 10, 2024. The plan was implemented to preserve the integrity of the company’s strategic alternatives review process, which is currently being conducted by a special committee of independent directors. The review process is considering various options, including continuing to execute the company’s business plan, a business combination, or a potential sale of the company.
Riot Platforms has been actively increasing its stake in Bitfarms, currently holding 47,830,440 common shares, representing 11.62% of the company’s outstanding voting securities. Despite an initial proposal to acquire all outstanding shares, which was rejected for undervaluing the company, Riot has continued to acquire additional shares, raising concerns among Bitfarms’ board members.
Response to Riot’s Actions
Riot’s actions have prompted Bitfarms to adopt the Rights Plan to ensure that the Board has sufficient time to explore and negotiate alternative strategies that could provide better value for shareholders. The plan prevents any shareholder from acquiring 15% or more of Bitfarms’ common shares without triggering the rights, which would allow other shareholders to purchase additional shares at a significant discount.
The Rights Plan does not prevent Riot from making an unsolicited takeover bid in compliance with Canadian securities laws, nor does it restrict Riot from making nominations or soliciting proxies. It is designed to provide a fair opportunity for the Board to consider all alternatives and to maximize shareholder value.
Implementation Details
On June 20, 2024, one right will be issued for each outstanding common share, and each right will become exercisable if any person or group acquires 15% or more of Bitfarms’ common shares before September 10, 2024, or 20% thereafter. The plan will remain effective until it is ratified by shareholders within the next six months.
The adoption of the Rights Plan is also subject to the acceptance of the Toronto Stock Exchange (TSX). The TSX may defer its consideration until it is satisfied that the appropriate securities commission will not intervene. The Board is not aware of any other pending or threatened takeover bids at this time.
About Bitfarms Ltd.
Founded in 2017, Bitfarms is a global Bitcoin mining company that operates 12 mining facilities across four countries: Canada, the United States, Paraguay, and Argentina. The company focuses on using environmentally friendly hydro-electric power and is committed to sustainable energy practices. Bitfarms develops and manages its facilities in-house, ensuring best-in-class operational performance and uptime.
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