Canadian Bitcoin miner Bitfarms and American Bitcoin miner Riot Platforms have reached a settlement agreement on September 23, ending a six-month dispute caused by Riot's planned hostile acquisition of Bitfarms. Analysts predict that Bitfarms’ share price will soar as a result.
The dispute between the two parties broke out in May this year, when Riot, already the largest shareholder of Bitfarms, proposed to acquire Canadian Bitcoin mining company Bitfarms for US$950 million. Bitfarms rejected the acquisition proposal, citing undervaluation. After that, Riot began to increase its holdings in Bitfarms stock, and the final shareholding ratio was close to 15%. Then Bitfarms launched a "poison pill" defensive measure, which is a "equity dilution anti-takeover measure" to avoid further acquisitions. In August, Riot Platforms invested an additional $2.28 million to acquire an 18.9% stake in Bitfarms.
Riot is also seeking substantial changes to Bitfarms' corporate board of directors, including the appointment of three independent directors, citing concerns about Bitfarms' governance and leadership.
Today, the two parties have reached a settlement by adjusting the board structure, with conditions including Andrés Finkielsztain resigning from the Bitfarms board, Amy Freedman joining the board, and Riot Platforms withdrawing its proposal to further reform the board before the special shareholders meeting.
According to a statement issued on the 23rd, the two parties also agreed to a standstill agreement (Standstill Agreement) that will last until 2026, that is, the target company reaches an agreement with the potential acquirer, and the acquirer will no longer increase its holdings of the target company’s shares for a period of time. Riot, which currently owns a large stake in Bitfarms stock, has agreed not to take further hostile actions against Bitfarms, including another acquisition, raising its stake above certain thresholds, or proposing changes to Bitfarms' board of directors.
Bitfarms will also add a sixth director, but this must be approved by shareholders at a meeting held before November 20.
The settlement content shows: “At the special meeting, shareholders will be requested to approve the expansion of the board of directors from five to six members, with an independent director nominated by the board of directors serving as the sixth director, and to approve the company’s shareholders’ meeting on July 24. Resolution. Riot has agreed to vote in favor of these matters."
Analysts said the agreement was a major win for Bitfarms and removed major doubts about the company's stock.
The HC Wainwright analyst group states that Bitfarms stock should trade at $4 per share. The analyst base maintains a "buy" rating on Bitfarms, believing the company's shares are undervalued. Bitfarms stock currently trades at $2.06 per share. Analysts believe Bitfarms is trading at about a 40% discount to other Bitcoin mining players based on 2024 revenue estimates.
Analysts said the settlement allows Bitfarms to now focus on its growth strategy in 2024, with the goal of reaching 21 exahashes per second by the end of next year. They see this as an important step in allowing Bitfarms to regain investor confidence and focus on its expansion plans.
Analysts said the settlement also benefits Riot because it avoids a potentially costly proxy war with Bitfarms.
"Two major mining companies, Bitfarms and Riot, have reached a settlement. Analysts estimate that Bitfarms' stock price is expected to double." This article was first published on "Blocker".
