Bitfarms Ltd. (Nasdaq/TSX: BITF) Adopts Shareholder Rights Plan in Response to Riot Platforms’ Takeover Bid
Bitfarms Ltd., a global Bitcoin mining company, has announced the adoption of a shareholder rights plan in response to an unsolicited takeover bid by Riot Platforms, Inc. This move aims to protect the interests of Bitfarms’ shareholders and preserve the integrity of the company’s ongoing strategic alternatives review process.
Shareholder Rights Plan Adoption
On June 10, 2024, Bitfarms’ Board of Directors unanimously approved the shareholder rights plan (the “Rights Plan”). This plan is designed to ensure that the board has adequate time to explore and negotiate potential strategies that could maximize shareholder value. The options under consideration include continuing to execute the current business plan, pursuing a business combination, or potentially selling the company.
Riot Platforms’ Stake and Actions
Riot Platforms, which currently holds 47,830,440 common shares or 11.62% of Bitfarms’ outstanding voting securities, has been actively increasing its stake. Riot’s initial proposal to acquire all outstanding shares was rejected by Bitfarms’ Board for undervaluing the company. Despite this, Riot has continued to acquire additional shares, raising concerns among Bitfarms’ board members.
Protection Against Hostile Takeover
The Rights Plan aims to prevent any shareholder from acquiring 15% or more of Bitfarms’ common shares without triggering the rights. This mechanism allows other shareholders to purchase additional shares at a significant discount, effectively diluting the stake of any potential acquirer and discouraging hostile takeovers.
However, the plan does not prevent Riot from making an unsolicited takeover bid compliant with Canadian securities laws or restrict it from making nominations or soliciting proxies.
Implementation and Effectiveness
Key details of the Rights Plan include:
- Issuance of Rights: On June 20, 2024, one right will be issued for each outstanding common share.
- Trigger Points: Each right becomes exercisable if any person or group acquires 15% or more of Bitfarms’ common shares before September 10, 2024, or 20% thereafter.
- Duration: The plan will remain effective until it is ratified by shareholders within the next six months.
- Regulatory Approval: The plan’s adoption is subject to the acceptance of the Toronto Stock Exchange (TSX). The TSX may defer its consideration until it is satisfied that appropriate securities commissions will not intervene.
About Bitfarms Ltd.
Founded in 2017, Bitfarms is a global Bitcoin mining company that operates 12 mining facilities across Canada, the United States, Paraguay, and Argentina. The company is dedicated to sustainable energy practices, using environmentally friendly hydro-electric power. By developing and managing its facilities in-house, Bitfarms ensures best-in-class operational performance and uptime.
Conclusion
The adoption of the Rights Plan by Bitfarms Ltd. is a strategic move to safeguard the interests of its shareholders amidst the unsolicited takeover bid by Riot Platforms. By implementing this plan, Bitfarms aims to provide its Board with sufficient time to explore and negotiate alternative strategies that could potentially offer better value for its shareholders.
