Bitfarms Adopts New Poison Pill Strategy

Bitcoin miner Bitfarms has implemented a new “poison pill” strategy following a tribunal ruling favoring rival Riot Platforms regarding its initial shareholder rights plan.

Riot announced on Wednesday that it succeeded in its application to the Ontario Capital Markets Tribunal to discontinue Bitfarms’ original poison pill plan, effective immediately, after hearings held on July 22 and 23.

“This ruling from the Tribunal in favor of Riot’s application is a win for all Bitfarms shareholders,” said Riot CEO Jason Les. He characterized the adoption of the off-market Poison Pill as a reflection of the flawed corporate governance at Bitfarms and claimed that Bitfarms’ directors are attempting to entrench themselves. Les appreciated the Tribunal’s swift action to remove the Poison Pill.

In June, Bitfarms had implemented its first poison pill strategy, which involved issuing new shares if any entity acquired more than 15% of its stake, effectively diluting that entity’s ownership.

In response to the recent ruling, Bitfarms announced its board unanimously approved a new shareholder rights plan that changes the threshold to 20% of common shares and is effective for six months.

“The Tribunal has decided to cease trade Bitfarms’ Rights Plan, which effectively terminates the Rights Plan. The Rights Plan was established to safeguard the integrity of the independent Special Committee’s strategic alternatives review process in light of attempts by Riot to acquire the Company,” said Bitfarms Lead Board Director Brian Howlett. He emphasized that the new rights plan aims to protect all shareholders’ interests.

The adoption of the new rights plan is still subject to approval from the Toronto Stock Exchange, and Riot may request the tribunal to nullify it.

Riot’s Takeover Attempt

In April, Riot Platforms attempted to acquire Bitfarms for approximately $950 million. Last month, Riot expressed interest in engaging with a restructured Bitfarms board but withdrew its initial offer of $2.30 per share, citing a lack of meaningful engagement from the current board.

Following the unsuccessful deal, Riot has been steadily acquiring more shares in Bitfarms, and it now owns about 60 million shares, or 14.9% of the company.

Earlier this month, Bitfarms scheduled a special meeting for shareholders on October 29 to vote on reconstituting its board following Riot’s requisition for the meeting on June 24.

Shareholders will vote on the removals of Nicolas Bonta, the chairman and interim CEO, and director Andrés Finkielsztain. New CEO Ben Gagnon, appointed on July 8, is not a target for removal as he does not serve on the board. Additionally, shareholders will vote on the removal of Fanny Philip, who was appointed recently to fill a vacancy left by co-founder Emiliano Grodzki.

Riot is proposing three candidates for the board: John Delaney, an expert in government and public affairs; Amy Freedman, a corporate governance expert; and Ralph Goehring, a financial expert with extensive public company CFO experience.

As of now, Riot Platforms has a market cap of $3.4 billion compared to Bitfarms’ $1.1 billion.