Bitfarms has implemented a defensive measure known as a "poison pill" to counter Riot Platforms' ongoing hostile takeover attempt. This tactic ensures that any potential acquirer must provide fair value to all shareholders, preventing a takeover without adequate compensation. The Bitfarms Board of Directors unanimously approved the shareholder rights plan, effective immediately, to protect the integrity of its strategic alternatives review process.

The poison pill strategy is a well-established defensive measure used to prevent corporate takeovers by making the deal too costly for the acquiring company. Bitfarms will issue new stock to existing shareholders, diluting the stake of any entity pursuing a hostile takeover. Under the Rights Plan, one right will be issued for each common share outstanding as of June 20, becoming exercisable if any person or entity acquires 15% or more of Bitfarms' outstanding common shares without complying with the plan's "Permitted Bid" provisions.

Permitted Bids must meet specific conditions, including being made to all shareholders, remaining open for 105 days, and meeting other requirements. While the Rights Plan is effective immediately, it requires shareholder ratification within six months. The Toronto Stock Exchange (TSX) will defer its consideration of the Rights Plan until it is assured that the appropriate securities commission will not intervene, which does not affect the plan's adoption or operation.

Riot Platforms made its unsolicited proposal public in May, offering to buy Bitfarms for approximately $950 million. The company also expressed its intention to request a special shareholder meeting to add independent directors to Bitfarms' board. This came after Bitfarms rejected Riot's takeover approach in April, which initially offered $2.30 per share in cash and stock for Bitfarms, approximately 20% above the firm's share price before the offer was made.

Following an evaluation of the proposal, Bitfarms' Special Committee of independent directors concluded that Riot's offer significantly undervalued the company and its growth prospects. Riot acquired a 9.25% stake in Bitfarms on May 28, becoming the company's largest shareholder, and further increased its stake by purchasing an additional 1.5 million shares on June 5, raising its total ownership to approximately 12%. By June 5, Riot beneficially owned 47,830,440 shares of Bitfarms.

In response to Riot's takeover attempt, Bitfarms has taken a proactive approach to protect its shareholders' interests. The poison pill strategy ensures that any potential acquirer must provide fair value to all shareholders, preventing a takeover without adequate compensation. As the situation continues to unfold, it is clear that Bitfarms is committed to maintaining its corporate stability and protecting the interests of its shareholders.