Riot Platforms escalates its takeover bid for Bitfarms by increasing its stake to 19.9%.
Riot Platforms has intensified its efforts to take over Bitfarms, a rival bitcoin mining company, by increasing its stake to 19.9%. This move brings Riot perilously close to triggering Bitfarms' poison pill defense, a strategy designed to prevent hostile takeovers. The escalation follows a significant investment campaign by Riot, which has spent $180 million since April to acquire shares of Bitfarms.
According to a filing made by Riot on Wednesday, the company invested an additional $10 million between August 15 and August 20, purchasing 4.5 million more shares of Bitfarms. This latest acquisition brings Riot's total holdings to 19.9% of Bitfarms' shares, just shy of the 20% threshold that would activate the poison pill defense.
Bitfarms' poison pill strategy, formally known as a shareholder rights plan, was introduced as a defensive measure. The plan grants shareholders the right to purchase additional shares at a discount if any entity acquires 20% or more of Bitfarms' shares without making a "Permitted Bid." This tactic is intended to dilute the ownership of the acquiring company, making a takeover more difficult and expensive.
The introduction of this new poison pill strategy follows a legal battle between Riot and Bitfarms. The Ontario Capital Markets Tribunal recently ruled in favor of Riot, terminating Bitfarms' initial poison pill strategy, which had a lower triggering threshold of 15%.
Since April, Riot has aggressively accumulated Bitfarms shares, amassing 80.8 million shares at an average cost of $2.23 per share. The company's strategy appears to be part of a broader consolidation trend within the bitcoin mining industry, which has seen increased competition and mergers following the recent bitcoin halving event.
In response to Riot's acquisition efforts, Bitfarms has scheduled a special shareholders meeting for October 29 to address the takeover bid. The outcome of this meeting could significantly impact the future ownership structure of the company.
In a related development, Bitfarms announced on Wednesday an all-stock merger with Stronghold Digital Mining. This merger is aimed at expanding Bitfarms' bitcoin mining and energy capacities in the United States. However, the announcement led to a 5.5% decline in Bitfarms' stock price, which fell to $2.24 per share.
Industry observers are closely watching how Riot's aggressive acquisition strategy and Bitfarms' defensive measures will play out. The outcome could have significant implications for the broader bitcoin mining industry, especially as companies seek to consolidate resources and expand their operations in an increasingly competitive market.
