Bitfarms and Riot Platforms end governance dispute with a standstill agreement until 2026.
Riot withdraws board change proposals; Bitfarms to add sixth board member pending shareholder approval.
Riotâs 18.9% stake and standstill pact secure Bitfarms' governance stability amid shareholder rights plan ratification.
Bitfarms and Riot Platforms, two Bitcoin mining firms, have agreed to end a long-running governance dispute that began early this year. The agreement, announced on September 23, concerns board changes, shareholder constraints, and vote pledges and is a key step toward securing the firms' future cooperation.
https://twitter.com/Bitfarms_io/status/1838172728869724451 Board Changes and Governance Adjustments
As part of the settlement, AndrĂ©s Finkielsztain will step down from Bitfarmsâ board of directors, and Amy Freedman will join as a new board member. Riot Platforms, which owns a substantial stake in Bitfarms, has agreed to withdraw its proposal for additional board changes ahead of Bitfarms' upcoming special shareholder meeting. The agreement also includes a standstill arrangement in which Riot has committed not to take any further hostile actions toward Bitfarms until 2026. This includes refraining from increasing its stake beyond an agreed threshold or proposing to alter Bitfarmsâ governance structure.
Additionally, Bitfarms plans to expand its board from five to six members, pending shareholder approval at a special meeting scheduled no later than November 20, 2024. Riot has pledged to vote in favor of these governance changes, including electing an independent director nominated by Bitfarmsâ board. The agreement also involves ratifying Bitfarmsâ July 2024 shareholder rights plan to protect the company against hostile takeovers.
Background of the Governance Dispute
The conflict between the two companies dates back to May 2024, when Riot Platforms, already one of Bitfarmsâ largest shareholders, proposed a $950 million takeover bid. Bitfarms rejected the offer, prompting Riot to increase its stake to just under 15% before Bitfarms triggered a âpoison pillâ defense, a strategy often employed to prevent unwanted takeovers. In August, Riot increased its stake to 18.9%, purchasing an additional $2.28 million worth of Bitfarms shares.
The takeover attempt also saw Riot Platforms call for drastic reform within Bitfarms' governance, including the appointment of three independent directors, using concerns over the company's leadership and direction. The drama unfolded against legal and operational setbacks, including a lawsuit by former Bitfarms CEO Geoffrey Morphy, who accused the company of breach of contract and wrongful dismissal and sought $27 million in damages.
The settlement marked a definitive turn for both companies, providing a way to close up the governance problems and stabilize their business. What's much more important is the standstill agreement, which ensures that Riot Platforms will not further advance any aggressive moves against Bitfarms for the term of such an agreement until 2026.Â
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