Riot also pointed out that the merger would be advantageous for shareholders of both companies.
Analysts at JPMorgan, an American multinational financial services company, support Riot Platforms’ proposed move to acquire rival company Bitfarms to build the largest publicly traded Bitcoin (BTC) mining center in the world.
Riot officially declared its intention to acquire Bitfarms on Tuesday, proposing to purchase all outstanding BITF shares at $2.30 per share. This offer represents a 24% premium to the company’s one-month volume-weighted average price as of May 24, translating to an equity value of approximately $950 million.
According to a Wednesday report, the JPMorgan analysts deemed the offer to be strategically and financially sound. They believe the deal “makes a lot of sense” if accepted.
Riot Buys 9.25% Stake in Bitfarms
Riot had earlier attempted to acquire Bitfarms privately without disclosing it to the public. However, the offer was rejected by Bitfarms’ board last month.
Undeterred by the rejection, Riot proceeded to acquire a 9.25% stake in Bitfarms, becoming one of its largest shareholders.
In light of this renewed bid, the company plans to call a special shareholder meeting to address its proposal, which it believes would benefit both companies.
During the meeting, the company wants to discuss appointing a new independent director to Bitfarms’ board citing concerns regarding the commitment of certain directors to act in the best interests of all shareholders. Riot believes the initial rejection stemmed from some directors at Bitfarms not representing the full interests of shareholders. Now, the firm wants to discuss the proposal directly with the shareholders.
“We are deeply concerned that the founders on the Bitfarms Board – Nicolas Bonta and Emiliano Grodzki – may not be acting in the best interests of all Bitfarms shareholders,” said Jason Les, CEO of Riot.
He noted that the sudden dismissal of Bitfarms CEO Geoffrey Morphy, who was fired following allegations of violation of contract without a “transition plan in place at a critical period of execution for Bitfarms and the industry raises serious governance questions”.
Proposed Merger Promises
As the industry anticipates the outcome of the proposed acquisition, Riot’s executive chairman Benjamin Yi, said the acquisition will be beneficial for both companies.
He noted that merging with Bitfarms would enable them to pool resources and create the largest Bitcoin mining firm in the world.
“A combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with geographically diversified operations well-positioned for long-term growth,” Yi said.
Riot also pointed out that the merger would be advantageous for shareholders of both companies. The acquisition would establish a vertically integrated Bitcoin mining company with up to 1.5 GW of power capacity and 52 EH/s self-mining capacity by the year’s end.
The combined company would operate 15 facilities across the United States, Canada, Paraguay, and Argentina, ensuring geographic diversification and benefiting from favorable energy arrangements.
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