Key Points
- Bitfarms’ stock is predicted to grow following a settlement with Riot Platforms, ending a hostile takeover attempt.
- The settlement allows Bitfarms to focus on its growth strategy and expansion plans, benefiting both companies.
Bitfarms, the Canadian Bitcoin (BTC) mining firm, and Riot Platforms recently reached a settlement. This marks the end of a six-month-long hostile takeover attempt by Riot.
Analysts from H.C. Wainwright believe this will lead to the growth of Bitfarms’ stock, which they predict will reach $4 per share. They maintain their “Buy” rating on Bitfarms, seeing the company’s shares as undervalued.
Details of the Settlement
Riot’s pursuit of Bitfarms started in April when it proposed a $950 million acquisition. Bitfarms’ board rejected this offer, deeming it undervalued.
Following this, Riot bought 19.9% of Bitfarms’ outstanding shares and attempted to alter the board structure. This move has now been withdrawn as part of the settlement.
As per the agreement, Bitfarms will increase its board to six members and nominate an independent director. Riot will support all proposed measures and gain the right to buy more Bitfarms shares, provided it holds at least 15% of outstanding shares.
Analyst’s Perspective
Analysts view this agreement as a significant victory for Bitfarms, as it removes a major obstacle for the company’s shares.
They note that Bitfarms can now concentrate on its 2024 growth strategy. The firm aims to achieve its target of 21 exahashes per second by the end of next year. Analysts see this as a critical step for Bitfarms to regain investor confidence and carry out its expansion plans without distraction.
The settlement also benefits Riot, as it prevents a potentially expensive proxy battle with Bitfarms.
However, analysts warn of risks such as Bitcoin price volatility, construction delays, and potential shareholder dilution. Despite these risks, Bitfarms shares rose 1.7%, while Riot’s shares climbed 1.3%, indicating the market’s positive reaction to the resolution.
