Bitfarms, a Bitcoin mining company, has implemented a shareholder rights plan just 10 days after its Annual General and Special Meeting. This plan is designed to allow Riot Platforms’ hostile takeover attempt to move forward, but only in specific circumstances.
Under the shareholder rights plan, if a person and their associates acquire 15% of Bitfarms’ shares by September 20 and then increase their ownership to 20% without approval from the board, other shareholders will have the opportunity to buy common shares at a discounted price compared to the market value at that time.
Bitfarms and Riot are engaged in a strategic battle. Following the outlined process, a takeover offer could be made in accordance with Canadian law, but the bidder’s shares would be diluted in the interim.
Riot had initially proposed a takeover of Bitfarms in April, which was rejected by Bitfarms’ board without much discussion. While Bitfarms acknowledged Riot’s interest in the company, they believed that the offer undervalued their shares. Riot subsequently changed its approach and withdrew the initial proposal.
Riot managed to increase its ownership in Bitfarms from 3.61% to 11.62% by the time of the shareholder meeting. During the election held at the meeting, Bitfarms co-founder Emiliano Grodzki lost his board seat. Riot questioned whether Grodzki and Nicholas Bonta were acting in the best interests of all shareholders.
Despite Bonta being reelected as chair by a significant margin, Bitfarms mentioned in the election results announcement that concerns about independence raised by certain proxy advisory firms may have influenced Grodzki not being re-elected.
Riot Platforms had planned to call for another shareholders meeting after the May 31 meeting of Bitfarms to add more members to the board. Bitfarms, in a statement on June 10, described this proposed meeting as part of Riot Platforms’ attempts to bypass and impede the board’s evaluation process regarding the potential sale of the company.
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