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Monday, June 17, 2024
HomeNewsBitfarms Takes Precautions Against Potential Hostile Takeover by Riot Platforms

Bitfarms Takes Precautions Against Potential Hostile Takeover by Riot Platforms

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In a move to protect its independence, Canadian bitcoin mining firm Bitfarms has approved the adoption of a shareholder rights plan, also known as a “poison pill,” to prevent a potential hostile takeover bid by rival miner Riot Platforms.

The rights plan, which will come into effect on June 20, will issue and attach one right to each common share of Bitfarms outstanding. This defense strategy is designed to dilute shares and make it more difficult for an acquiring entity to accumulate a significant stake in the company.

According to the plan, the rights will be exercisable if one acquiring entity accumulates over 15% of Bitfarms’ outstanding shares before September 10. The threshold will be relaxed to 20% after September 10 if a takeover bid meets certain criteria.

The move comes just days after Riot Platforms revealed it had become a beneficial owner of Bitfarms with 11.62% of its issued and outstanding shares through open market acquisitions. Riot had initially made an offer in April to acquire 100% of Bitfarms’ outstanding common stocks for $2.30 per share, which was rejected by Bitfarms, citing that the offer “significantly undervalued” the company and its growth prospects.

Riot has since made additional purchases, owning 47.83 million shares, representing 11.62% of Bitfarms, as of June 5.

The adoption of the shareholder rights plan is subject to approval by the Toronto Stock Exchange. Bitfarms’ stock is currently down 5% during pre-market trading on Monday.

The move by Bitfarms is seen as a strategic move to protect its independence and prevent a potential hostile takeover by Riot Platforms. The adoption of the shareholder rights plan is a common defense strategy used by companies to deter or prevent hostile takeover attempts.

Source: TheMinerMag

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