Bitcoin miner Bitfarms has approved a new shareholder rights protection strategy to prevent a hostile takeover by competitor Riot Platforms.
On June 24, the Ontario Capital Markets Tribunal ruled in Riot's favor, ordering Bitfarms to immediately terminate the previous plan. The initiative adopted in June (in practice called the "poison Pill", Poison Pill) assumed that with the accumulation of 15% of shares by third-party organizations, the company would issue new securities, eroding the buyer's share.
"This decision of the Riot Statement Tribunal is a victory for all Bitfarms shareholders. The adoption of a non—market Poison Pill is another example of the destroyed corporate governance that the company suffers from and the continued attempts of the directors to hold on," commented Riot CEO Jason Les on the decision of the instance.
On May 29, it became known about Riot's offer to acquire Bitfarms for $950 million. It assumed a 20% premium to the weighted average stock prices for the month. However, the board of the Canadian company considered the offer "significantly underestimating the company and its growth prospects."
Riot continued to increase its stake in the firm, which reached 14.9% by the end of June. The company demanded the convening of a special meeting of Bitfarms shareholders and nominated three independent directors to the board as part of a hostile takeover campaign.
Bitfarms responded to the Tribunal's decision with a new protection plan. It provides for a limitation of the accumulation of shares of shares of 20%. The company's management noted that there are currently no specific takeover proposals that can be accepted under Canadian law. This means that the holders of 50% of the ordinary shares must give their consent to buy them back.
"However, the board is aware that Riot is seeking to replace the three directors of Bitfarms at a special hybrid shareholder meeting on October 29, 2024. The protection plan allows Riot to continue nominating candidates," the statement said.
The strategy entered into force immediately, but must receive shareholder approval within six months. If this does not happen, the action of the plan will be stopped.
Recall that in July, Riot bought the Kentucky-based mining company Block Mining for $92.5 million.