Bitfarms adopts ‘poison pill’ amid Riot Platforms’ takeover attempt

Bitfarms, a Bitcoin mining company based in Toronto, has announced the implementation of a shareholder rights plan to protect its strategic review process from takeover attempts by Riot Platforms.

In a press release dated June 10, Bitfarms revealed that its board of directors unanimously approved the shareholder rights plan to ensure the integrity of its strategic alternatives review process. This plan, commonly known as a “poison pill,” is designed to safeguard the interests of Bitfarms’ shareholders against any potential hostile takeover bids.

The decision comes in light of recent actions by Riot Platforms, a Bitcoin mining company from Colorado. Riot currently holds 47,830,440 common shares, accounting for 11.62% of Bitfarms’ shares. Riot has proposed to acquire all of Bitfarms’ issued and outstanding common shares for $950 million and has announced plans to requisition a special meeting of shareholders to bypass the review process.

Bitfarms’ special committee determined that Riot’s offer “significantly undervalues the company and its growth prospects.” While the committee welcomed Riot’s interest, it noted that Riot declined to participate in the strategic alternatives review process, instead opting to acquire additional common shares in the open market. Riot has increased its stake by 8.01% since April 22, 2024, which Bitfarms views as an attempt to undermine the review process and deter other interested parties.

The Rights Plan establishes a threshold of 15% share accumulation before it triggers, designed to avert any immediate threat to the strategic review process. Effective June 20, one right will be issued per common share, becoming exercisable if any individual or group acquires 15% or more of the outstanding common shares before September 10, or 20% thereafter, without adhering to the plan’s regulations.

This plan requires ratification by shareholders within six months and approval from the Toronto Stock Exchange, which may delay acceptance until the relevant securities commission is satisfied.