Introduction of Poison Pill Strategy
Bitfarms, a leading cryptocurrency mining firm, announced a new shareholder rights plan, commonly referred to as a “poison pill” strategy, on July 24. This plan is designed to deter any takeover attempts, particularly from Riot Platforms, by issuing new shares to dilute the ownership stakes of any entity that acquires over 20% of its shares within the next six months. The implementation of this strategy requires ratification by shareholders and approval from the Toronto Stock Exchange.
Background and Previous Poison Pill
In June, Bitfarms had adopted a similar poison pill strategy, which would trigger the issuance of new shares if an entity acquired more than 15% of the company’s shares. However, Riot Platforms, having acquired 14.9% of Bitfarms’ shares, challenged this plan at the Ontario Capital Markets Tribunal. The tribunal ruled in favor of Riot, forcing Bitfarms to abandon its initial strategy.
Riot Platforms’ Response
Riot Platforms CEO Jason Les expressed approval of the tribunal’s decision, criticizing Bitfarms’ corporate governance. Les stated, “The adoption of the off-market Poison Pill is yet another example of the broken corporate governance that plagues Bitfarms and of the ongoing attempts by the Bitfarms directors to entrench themselves.” Riot has also called for a shareholder meeting to remove Bitfarms’ founder from the board, intensifying the ongoing conflict between the two companies.
Protection of Shareholder Interests
Bitfarms has emphasized that the new shareholder rights plan is intended to protect shareholders from “creeping bids,” where an entity gradually accumulates a significant stake in the company without launching a formal takeover bid. The company stressed that this plan is not a response to any specific acquisition proposal but is aimed at ensuring fair treatment for all shareholders.
Recent Developments
The takeover bid by Riot Platforms is the latest chapter in an ongoing saga between the two companies. In May, Bitfarms rejected a $950 million acquisition offer from Riot and has since strengthened its board by appointing Fanny Philip and promoting Ben Gagnon to the position of CEO. These moves are seen as efforts to fortify the company’s leadership amid the takeover threat.
Conclusion
The new poison pill strategy by Bitfarms represents a significant development in its ongoing efforts to fend off Riot Platforms’ takeover attempts. The plan aims to protect the interests of shareholders and ensure fair treatment in any future acquisition scenarios. As the situation unfolds, both companies remain locked in a battle for control, highlighting the competitive nature of the cryptocurrency mining industry.
Summary: Bitfarms introduces a new poison pill strategy to thwart Riot Platforms’ takeover bid. The plan, pending shareholder and Toronto Stock Exchange approval, aims to protect shareholders from creeping bids.
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