Riot Platforms, Inc. (RIOT) has criticised Bitfarms Ltd. (BITF) for implementing a poison pill defence scheme to foil a hostile takeover. A poison pill is a defence strategy where a firm sells discounted shares to stakeholders to protect itself.
Riot Platforms Bitter Over Bitfarms Poison Pill
According to Riot, this move by Bitfarms is “shareholder unfriendly” and spotlights the crypto miner’s gaps in corporate management. The conflict started when Riot, which is also a cryptocurrency miner, made a $950m unsolicited bid for Bitfarms in April 2024.
Bitfarms rejected this offer, stating that it did not reflect the organisation’s true market value, and proceeded to approve and implement the poison pill plan. According to Reuters, Riot indicated that it “privately urged” Bitfarms to axe its chairperson and interim chief executive, Nicolas Bonta, and appoint at least two independent board directors.
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This defence blueprint stipulates that should an investor accumulate more than a 15% share between 20 June 2024 and 10 September 2024, the company will issue new shares to other shareholders to diminish the 15% stake. Riot said that this 15% ceiling is “well below the customary 20% threshold” and is “in direct conflict with established legal and governance standards”.
LSEG data shows that Riot has a 13.1% share in Bitfarms and is currently the largest shareholder. Jason Les, Riot’s chief executive officer, added:
We will continue to push to address the serious corporate governance issues at Bitfarms and ensure that shareholders have a say on the Company’s path forward.
Based on Reuters information, Riot’s shares slid by 35% and Bitfarm’s by 12% so far this year, contradicting the general uptick in the crypto market on the back of approved crypto exchange-traded funds (ETFs).
