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Riot won’t acquire Bitfarms, “the premium isn’t high enough”
Analysts at HC Wainright argue that Riot’s acquisition of Bitfarms will be rejected due to Bitfarm’s board disapproval and insufficient rewards.
Citing the Bitfarm board’s rejection of Riot’s initial offer and the fact that the proposed premium is not enough to attract shareholder approval, analysts at HC Wainwright did not give the acquisition a high probability of success of Bitfarms by Riot.
“The premium is not high enough to compel Bitfarm shareholders to accept the deal, given the deep valuation discount at which the shares currently trade, in our view,” principal analyst Mike Colonnese wrote in a stock note. research. “We also note that this is a non-binding proposal and that no definitive agreement has been made at this time.”
Riot will request a special meeting Bitfarm shareholders at the annual shareholder meeting on Friday to discuss the appointment of new independent directors. Over the next four months, Revolt will aim to appoint new directors to gain board approval for the acquisition, Colonnese also wrote.
Riot’s board of directors is behind the acquisition and unanimously approved the proposal. The company has the resources to execute the transaction. On April 30, he had over $700 million in cash and 8,872 unencumbered Bitcoins (Bitcoin) in the balance sheet.
Acquisition offer
In a Press release on May 28, cryptocurrency mining company Riot announced an acquisition offer to Bitfarm (BITF). The offer was for all BITF shares at $2.30 per share, for a total acquisition of $950 million.
Riot’s proposal involves a mix of cash and common stock, a structure that could be advantageous Bitfarm shareholders. This deal would allow them to retain ownership “of up to approximately 17% of the combined company,” potentially providing them with a stake in a larger, more diversified entity.
Previous proposals
In April, Bitfarm rejected Riot’s proposal to acquire the company. The final terms and conditions of any potential transaction would require approval from Bitfarm and Riot’s respective boards of directors.
The refusal occurred quickly and “without engaging in substantive dialogue.”
“We are deeply concerned that the founders of the Bitfarms board – Nicolas Bonta and Emiliano Grodzki – may not be acting in the best interests of all Bitfarms shareholders,” Riot CEO Jason Les said at the time.
Riot’s current price is $10.34 and has a “buy” rating and a price target of $17.00 per share.