Bitfarm rejects Riot’s acquisition bid, says it undervalues the company

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Bitfarm rejects Riot’s acquisition bid, says it undervalues the company
Credit: © Reuters.

Bitfarms (BITF) has rejected Riot Platforms' (NASDAQ: RIOT ) unsolicited offer to acquire the Bitcoin miner at $2.30 per share in cash and stock, claiming the proposal significantly undervalizes the company and its growth prospects.

The Toronto-based company also said it has received additional unsolicited interest since Riot's initial proposal in late April.

RIOT shares fell 1% in premarket trading Wednesday, while BITF climbed 1.8%.

Bitfarms said each interested party has agreed to a non-disclosure agreement, and a special committee at the company is reviewing strategic alternatives. These could include a business combination, a sale of the company, or continuing with its current business plan.

Riot disclosed its bid for Bitfarms on Tuesday, revealing it had accumulated a 9.3% stake, becoming the largest shareholder. The company later increased its holding to about 10%.

Riot claims its offer provides a premium for shareholders and immediate cash value, suggesting Bitfarms’ shareholders would own about 17% of what could become the largest Bitcoin miner globally.

Bitfarms' shares last closed at $2.21 on Nasdaq, down 24% this year, and at C$3.01 in Toronto, down 22% year-to-date.

In the meantime, Bitfarms continues its search for a new CEO and is proceeding with the expansion and upgrade of its mining fleet.

Earlier this month, the company accelerated the departure of former CEO Geoffrey Morphy after he filed a lawsuit against Bitfarms, alleging breach of contract and wrongful dismissal.

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