Bitfarms Ltd (NASDAQ: BITF) opened about 10% down on Monday after Riot Platforms Inc (NASDAQ: RIOT) withdrew its $2.30 per share offer to takeover the bitcoin miner.
Shares of Riot Platforms are also in the red at writing.
Why did Riot Platforms withdraw its offer for Bitfarms?
Bitfarms recently rejected the aforementioned proposal that valued it at about $950 million.
The decision to withdraw that offer, however, does not suggest that Riot Platforms is no longer interested in buying BITF. Instead, it stems from the acquirer’s assessment that it needs changes at the acquiree’s board to move forward with formal negotiations, as per a press release today.
Riot remains completely committed to pursuing a transaction with Bitfarms. However, it is clear that engaging with the incumbent Bitfarms Board on a potential combination is just not possible.
Note that Bitfarms stock is currently trading to $2.76.
Riot Platforms nominates candidates for Bitfarms board
Riot Platforms nominated three candidates to be added to Bitfarms’ board on Monday. These include Amy Freedman (former CEO of Kingsdale Advisors), John Delaney (former mayor of Jacksonville), and Ralph Goehring (former CFO of Bonanza Creek Energy).
The crypto company called for a special meeting this morning to seek shareholders’ approval for its nominated candidates.
It is worth mentioning here that RIOT is tapping on its sizable close to 15% stake in Bitfarms to push for the aforementioned boardroom changes. Its strategy reflects a belief that direct representation on Bitfarms’ board is crucial for advancing its acquisition plans.
Bitfarms stock is currently down some 20% versus its year-to-date high in mid-February.
Watch here: https://www.youtube.com/embed/DQXYWRfyS7A?feature=oembed
Bitfarms LTD had $50 million in revenue in fiscal Q1
Today’s announcement marks a significant shift in strategy for Riot Platforms from a direct buyout of Bitfarms to a more nuanced approach focused on gaining influence within its governance structure.
Investors and the industry at large will closely monitor how Bitfarms responds to the new strategy and whether it will ultimately lead to a successful merger negotiations between the two bitcoin mining companies.
The news arrives more than a month after BITF reported $50 million in revenue for its first financial quarter – up about 9.0% on a year-over-year basis. Its gross mining margin stood at a healthy 59% in Q1.
In April, the Canadian tax authorities also confirmed that Bitfarms will get a refund on $24 million worth of previously paid VAT (value added tax). Jeff Lucas – its chief executive said at the time:
This cash infusion further enhances our financial flexibility. Combined with our robust balance sheet and our capital efficient strategy, we are well positioned to fund our 2024 growth initiatives. We have sufficient liquidity to pay for all of the miners needed to reach 21 EH/s.
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