Bitfarms takes a poison pill
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Canada-based crypto miner Bitfarms yesterday adopted a poison pill — a move sometimes employed by a company under threat.
Why it matters: Bitfarms is reaching for a corporate defense strategy that would dilute shareholder value in an attempt to gird itself from the possibility of a hostile takeover.
How it works: Under Bitfarms' poison pill plan, if any entity accumulates more than 15% of the company after June 20 and until Sept. 10, the company would issue new shares to dilute that acquirer's stake.
- After Sept. 10, the threshold would be raised to 20% if the takeover attempt meets certain conditions.
- Other mining companies have done this in reaction to hostile takeover attempts, which can be done with shares or coins.
Bitfarms' defensive stance follows an unsolicited proposal in April from a larger rival mining operator, Riot Platforms.
- Bitfarms rejected the cash-and-stock offer of $2.30 because it "significantly undervalued" the company, but Riot is claiming that Bitfarms Board rejected it "without engaging in substantive dialogue with Riot."
- Riot is also calling into question whether certain directors are acting in Bitfarms' best interest.
- Bitfarms responded to Riot's questioning with its own press release indicating there were other unsolicited deals on the table to consider.
What we're watching: Riot showed last week that it had built a 12% stake in Bitfarms, according to a disclosure filing, up from the 3.6% stake Riot had when it put a deal on the table.
- By the numbers: So far this year, Bitfarms' stock is beating Riot's in that it has declined less; last night BITF closed at $2.30, after falling more than 4% on news of the poison pill.
