The Ontario Capital Markets Tribunal has terminated Bitfarms’ “poison pill” strategy, designed to thwart a takeover attempt by rival mining firm Riot Platforms. The tribunal issued a cease trade order on July 24, effectively ending Bitfarms’ defensive measure.
Background on the Poison Pill Strategy
Bitfarms adopted the poison pill strategy, also known as the “rights plan,” in response to Riot Platforms’ $950 million buyout offer. The offer, made on June 13, was deemed by Bitfarms to undervalue the company. The poison pill strategy would have allowed existing shareholders to purchase additional shares at a significant discount if any entity acquired more than 15% of the company’s outstanding shares before September 10. This would dilute the acquirer’s stake, making the takeover more difficult and less attractive.
Tribunal’s Ruling and Reactions
Riot Platforms welcomed the tribunal’s decision. Jason Les, CEO of Riot Platforms, stated, “This ruling from the Tribunal in favor of Riot’s application is a win for all Bitfarms shareholders. The adoption of the off-market Poison Pill is yet another example of the broken corporate governance that plagues Bitfarms and of the ongoing attempts by the Bitfarms directors to entrench themselves.”
Bitfarms defended its rights plan, with Brian Howlett, lead director of Bitfarms’ board, arguing that the strategy was meant to protect the integrity of alternative takeover processes. “In light of this decision, the Bitfarms Board has adopted the New Rights Plan to ensure the interests of all shareholders are protected,” Howlett added.
Also Read: Riot Platforms’ Takeover Bid Sparks Board Changes at Bitfarms
Corporate Governance and Board Elections
The conflict between the two firms highlights ongoing concerns about corporate governance at Bitfarms. Riot Platforms has been vocal in its criticism, asserting that Bitfarms’ current leadership is not acting in the best interests of shareholders. Riot believes that electing its three director nominees—John Delaney, Amy Freedman, and Ralph Goehring—at the next shareholder meeting on October 29 is crucial for improving governance.
Bitfarms has faced internal turmoil as well. In May, former CEO Geoffrey Morphy stepped down and filed a lawsuit against the company. Nicolas Bonta has been serving as interim president and CEO. Les has called for Bonta’s removal, attributing the company’s poor governance practices to him.
Bitfarms’ Operations and Future Plans
Bitfarms operates 12 Bitcoin mining facilities across four countries: Canada, the United States, Paraguay, and Argentina. Despite the ongoing corporate struggle, Bitfarms continues its mining operations while seeking to resolve the leadership and governance issues that have come to the forefront amid Riot Platforms’ takeover attempt.
