Riot won’t acquire Bitfarms, ‘premium is not high enough’

Analysts from HC Wainright claim that Riot’s acquisition of Bitfarms will be rejected due to disapproval from Bitfarm’s board and insufficient bonuses.

Analysts at HC Wainwright did not give Riot’s acquisition of Bitfarms a high probability of success, citing Bitfarm’s board’s rejection of Riot’s initial offer and that the premium offered was insufficient to gain shareholder approval.

“In our view, the premium is not high enough to force Bitfarm shareholders to accept the deal, given the deep valuation discount at which shares are currently trading,” lead analyst Mike Colonnese wrote in a research note. “We also point out that this is a non-binding proposal and no definitive agreement has been reached at this point.”

Riot will request a special meeting of Bitfarm’s shareholders at its annual shareholder meeting on Friday to discuss the appointment of new independent directors. Colonnese also wrote that within the next four months, Riot will aim to nominate new directors to gain board approval for the acquisition.

Riot’s board of directors is behind the acquisition and unanimously approved the offer. The company has the necessary resources to execute the transaction. On April 30, it had over $700 million in cash and 8,872 unencumbered Bitcoin (BTC) on its balance sheet.

purchase offer

Crypto mining company Riot announced an acquisition offer for Bitfarms (BITF) in a press release on May 28. The offer was $2.3 per share for all BITF shares, and the purchase totaled $950 million.

Riot’s offer includes a mix of cash and common stock, a structure that could be beneficial for Bitfarms shareholders. This arrangement would allow them to maintain ownership of “up to approximately 17% of the combined company,” potentially giving them a stake in a larger, more diversified entity.

Previous offers

In April, Bitfarm rejected Riot’s offer to acquire the company. The final terms and conditions of any potential transaction will require approvals by Bitfarm and Riot’s respective Boards.

The rejection occurred quickly and “without any real dialogue.”

“We are deeply concerned that the founders on the Bitfarms board (Nicolas Bonta and Emiliano Grodzki) are not acting in the best interests of all Bitfarms shareholders,” Riot CEO Jason Les said at the time.

Riot’s current price is $10.34, with a “Buy” rating and a price target of $17.00 per share.