The plan, which passed after Bitfarms’ shareholder meeting, will complicate Riot’s effort but not necessarily stop it from succeeding.

Bitfarms Implements Shareholder Rights Plan Amidst Riot Platforms’ Takeover Bid

Key Points:
- Shareholder Rights Plan: Bitfarms has adopted a shareholder rights plan shortly after its Annual General and Special Meeting to address Riot Platforms' hostile takeover attempt.
- Plan Details: The plan allows shareholders to purchase common shares at a significant discount if a person or associated persons increase their shareholding to 20% without board approval.
- Riot’s Acquisition: Riot Platforms had increased its share in Bitfarms from 3.61% to 11.62% by the time of the shareholders meeting.
- Board Dynamics: Bitfarms co-founder Emiliano Grodzki failed to retain his board seat, while Nicholas Bonta was reelected as board chair despite independence concerns.

Shareholder Rights Plan to Counter Hostile Takeover

Bitfarms, a Canadian Bitcoin mining company, has adopted a shareholder rights plan in response to Riot Platforms’ hostile takeover bid. The plan, introduced 10 days after Bitfarms’ Annual General and Special Meeting, aims to prevent any person or associated persons from acquiring more than 20% of Bitfarms’ shares without board approval.

Plan Mechanism

Under the plan, if a shareholder's stake exceeds 15% by September 20 and further increases to 20% without board consent, other shareholders can purchase additional shares at a significant discount. This move is designed to dilute the potential acquirer’s shareholding, thereby making a takeover bid more difficult and expensive.

Background and Board Dynamics

Riot Platforms had increased its stake in Bitfarms from 3.61% to 11.62% prior to the shareholders meeting. Riot accused the Bitfarms board of rejecting its April takeover proposal without substantive dialogue, while Bitfarms claimed that Riot’s offer undervalued the company’s shares. Riot then chose to continue acquiring shares on the open market, which Bitfarms interpreted as an attempt to undermine the board’s integrity.

Board Election Results

The shareholder meeting also saw significant changes in the board composition. Bitfarms co-founder Emiliano Grodzki lost his board seat, possibly due to independence concerns raised by proxy advisory firms. However, Nicholas Bonta was reelected as board chair by a wide margin.

Strategic Implications

Riot Platforms' strategy includes requisitioning an additional shareholders meeting to add more members to Bitfarms' board. Bitfarms has labeled this as an effort to bypass and disrupt the board’s ongoing review process regarding the sale of the company.

Conclusion

The adoption of the shareholder rights plan represents Bitfarms' attempt to protect itself against Riot Platforms’ aggressive acquisition tactics. The coming months will likely see further strategic maneuvers as both companies navigate this corporate struggle.