Is Riot’s Bitfarms Bid About to Go Up in Flames?
Last month, crypto miner Riot Platforms (NASDAQ:RIOT) launched a hostile bid for fellow miner Bitfarms (NASDAQ:BITF). Riot’s move was aimed at creating the largest Bitcoin (BTC-USD) mining entity globally with nearly 52 EH/s of self-mining capacity. However, Riot’s Bitfarms bid may be about to go up in flames.
Riot’s Takeover Attempt
Riot had launched its $2.30 per share acquisition offer for Bitfarms after the latter’s board rejected its initial offer in April. In the aftermath, Riot revealed a nearly 10% stake in Bitfarms and hiked it to around 12% last week.
Prompted Bitfarms’ “Poison Pill” Move
Bitfarms, however, chose a “Poison Pill” strategy to fend off Riot. The crypto miner has adopted a shareholder rights plan that will result in the issuance of new shares if any entity acquires more than a 15% stake in the company between June 20 and September 10. This means any entity acquiring a stake beyond this threshold in Bitfarms faces subsequent dilution of its holdings.
Bitfarms’ move is aimed at enabling the company to conduct its previously announced strategic alternatives review process. Back in April, Bitfarms had rebuffed Riot’s proposal, deeming it undervalued the company. Bitfarms’ strategy is weighing heavily on its stock today, which is down by nearly 4%. Similarly, Riot’s share price has taken a nearly 3.6% hit today. Overall, Riot stock has now tanked by around 36% year-to-date.
Amid this takeover drama, Cantor Fitzgerald’s Brett Knoblauch has initiated coverage on both Riot and Bitfarms with a Buy rating this week. The analyst’s $23 price target implies a nearly 132.4% upside for Riot. His $5 price target points to a 117.4% upside for Bitfarms.
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Overall, the Street has a Strong Buy consensus rating on both Riot and Bitfarms. Analysts see a hefty potential upside of around 80% in both names. However, the next trajectory for these stocks hinges on how the takeover drama unfolds from here on.
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