Bitfarms Adopts Poison Pill to Thwart Riot Platforms’ Takeover Bid

Bitfarms has adopted a shareholder rights plan to protect its strategic review process from Riot Platforms’ takeover attempts.

Bitfarms, a Toronto-headquartered Bitcoin mining company, announced on June 10 that its board of directors unanimously approved the adoption of a shareholder rights plan to safeguard the integrity of its strategic alternatives review process.

The Rights Plan, commonly referred to as a “poison pill,” aims to protect the interests of Bitfarms’ shareholders by preventing any potential hostile takeover attempts. This move comes in response to recent actions by Riot Platforms, a Colorado-based Bitcoin mining company.

“The Rights Plan is being adopted to preserve the integrity of our previously announced strategic alternatives review process and is in the best interests of all Bitfarms’ shareholders.”

Riot currently holds 47,830,440 common shares, representing 11.62% of Bitfarms’ shares. Recently, Riot made a proposal to acquire all of Bitfarms’ issued and outstanding common shares for $950 million and announced its intention to requisition a special meeting of shareholders to circumvent the review process.

In response, Bitfarms’ special committee determined that Riot’s offer “significantly undervalues the company and its growth prospects.” The Toronto-headquartered firm added that although the special committee welcomed Riot’s interest in the company, Riot declined to participate in the strategic alternatives review process.

“[Riot] instead has continued to acquire common shares of the company in the open market, thereby acquiring an additional 8.01% of the company’s common shares since April 22, 2024, in an attempt to undermine the integrity of the process and thwart the interest of third parties.”

The Rights Plan sets a threshold of 15% share accumulation before triggering, designed to prevent any immediate threat to the strategic review process. Starting June 20, one right will be issued per common share, becoming exercisable if any person, along with certain related persons, acquires 15% or more of the outstanding common shares before September 10, or 20% thereafter, without following the plan’s rules.

The Rights Plan needs to be ratified by shareholders within six months and must be approved by the Toronto Stock Exchange, which might also delay acceptance until the relevant securities commission is satisfied.

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