Bitfarms defends pending buy, calls Riot claims ‘misleading’

Bitfarms defended its pending acquisition of Stronghold Digital Mining on Wednesday, calling recent claims from Riot Platforms “misleading.”

The months-long feud between Bitfarms and Riot was revived Tuesday when the latter company called on Bitfarms to halt all transactions ahead of its October shareholder meeting.

That message — in the form of Riot’s open letter to shareholders — came after Bitfarms last month revealed its proposed buy of Stronghold Digital.

Riot, which is Bitfarms’ largest shareholder, criticized the pending $125 million stock-for-stock transaction (with Bitfarms also set to assume $50 million of debt). It noted that the $175 million sum is a more than 100% premium to Stronghold’s closing share price the day before the announcement.

Though Bitfarms did not specifically defend the amount it plans to pay for Stronghold in a Wednesday statement, the transaction offers a “tremendous value-enhancing opportunity,” the company said.

It added that the deal is set to diversify Bitfarms’ access to power and rebalance its energy portfolio toward the US. In all, the transaction could add about 307 megawatts of power capacity by the end of next year.

Riot tried to buy Bitfarms earlier this year via a so-called “hostile” bid that Bitfarms rejected. Riot now owns a 19.9% stake in Bitfarms.

Accusing Bitfarms leadership of “poor corporate governance practices and consistent inability to realize Bitfarms’ full potential,” Riot called a special shareholder meeting that is scheduled for late October.

“The upcoming special meeting is not about corporate governance, as Riot has repeatedly positioned it to be, but rather about Riot attempting to acquire Bitfarms at a discounted price for the benefit of Riot shareholders, not Bitfarms shareholders,” Bitfarms said.

Riot has also claimed Bitfarms has not been willing to “work constructively” with the company. The latter essentially accused Riot of the same thing, noting it has refused to enter into a non-disclosure agreement with Bitfarms and has not amended its acquisition proposal.

Next month’s meeting will include a vote on two new potential board directors. Riot nominated Amy Freedman and John Delaney to replace co-founder Andres Finkielsztain and Fanny Philip as board members.

Bitfarms’ decision to appoint CEO Ben Gagnon to the board last month as company co-founder Nicolas Bonta stepped down was implemented “independently of Riot, on behalf of all of our shareholders,” Bitfarms said Wednesday.

“The board will consider and respond to Riot’s amended requisition proposal in due course,” the company added. “No shareholder action is required at this time.”

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