In response to a takeover proposal made today, shares of Bitfarms Ltd. (NASDAQ: BITF) are experiencing a notable rise on the US stock charts. As of the last check during the pre-market session, BITF stock was observed trading at $2.22, reflecting an increase of 9.90%.
Riot Platforms’ Acquisition Offer
The Bitfarms Board of Directors has received a formal proposal from Riot Platforms to purchase all outstanding shares at a price of US$2.30 per common share. Riot Platforms also made revelation of having a 9.25% share in Bitfarms, making it the company’s largest stakeholder. The proposal is priced at a 24% premium over the company’s one-month volume-weighted average share price as of May 24, 2024. The proposal places Bitfarms’ overall stock worth at around US$950 million.
Up to 17% of the merged company may be owned by Bitfarms shareholders as a consequence of the offer, which combines cash and Riot common shares. This arrangement is designed to provide Bitfarms shareholders with immediate cash value and the opportunity for future value creation through a stake in a financially robust and strategically sound company led by experienced management.
Financial Strength And Market Position
Bitfarms is expected to gain significant financial advantages from Riot’s strong balance sheet, which includes minimal corporate debt, over US$700 million in cash, and 8,872 unencumbered Bitcoin as of April 30, 2024. Riot’s financial strength, approximately ten times that of Bitfarms, would support Bitfarms’ growth initiatives and enhance its access to public equity markets.
Despite the initial rejection of Riot’s proposal by the Bitfarms Board and the ongoing legal concerns involving Bitfarms’ former CEO, Riot remains committed to pursuing this acquisition. Riot has disclosed its intentions directly to Bitfarms shareholders and plans to call a Special Meeting post Bitfarms’ Annual General and Special Meeting on May 31, 2024, to introduce new, independent directors to the Bitfarms Board.
This strategic move underscores Riot’s confidence in the synergistic potential and future success of the combined company, promising substantial benefits to shareholders of both organizations.
