Pressure is building on Bitfarms Ltd. (BITF) (TSE:BITF) as rival Riot Platforms (RIOT) has boosted its stake in the Canadian Bitcoin (BTC-USD) miner. On August 13, Riot bought one million additional shares of Bitfarms, increasing its stake to 18.9%. Riot bought the shares for an average price of $2.28 apiece, resulting in a total purchase consideration of $2.28 million. Following the latest purchase, Riot now owns 85.29 million of Bitfarms common shares.
Meanwhile, Bitfarms announced the abrupt departure of its co-founder and chair Nicolas Bonta, effective immediately. The news comes as Bitfarms is trying to fend off hostile takeover attempts by Riot. The latter seeks to replace three of Bitfarms’ board members, including Bonta.
Bitfarms also stated that its lead director, Brian Howlett, will be the independent chairman. Also, the newly-appointed CEO, Ben Gagnon, will also join the board.
Tug-of-War Between Bitfarms and Riot
Riot revealed its initial stake in April this year and made a proposal to takeover Bitfarms in a $950 million deal. However, Bitfarms stated that the offer undermined the company’s position. The company adopted a “poison pill” to avoid any further hostile takeover attempts. Unfortunately, for Bitfarms, the Ontario Capital Markets Tribunal rejected the strategy. Meanwhile, Riot withdrew its offer at the time but continued to quietly build a larger stake in Bitfarms.
Amid renewed enthusiasm to replace three of Bitfarms’ board members, Riot said it will reinitiate dialogue with Bitfarms with a revised offer. Notably, Riot’s future plan of action is dependent on the result of the special shareholder meeting, changes to Bitfarms’ board of directors, and discussions with the revamped board and management.
Reports suggest that Bitfarms has initiated a second attempt of “poison pill” to block any single majority shareholder from owning more than 20% of the company.
Is Bitfarms a Good Stock to Buy?
On TipRanks, BITF has a Strong Buy consensus rating backed by six Buys and one Hold recommendation. The average Bitfarms price target of $4.25 implies 86.4% upside potential from current levels. Shares have lost 21.6% of their value year-to-date.
Is RIOT Stock a Buy, Sell, or Hold?
With ten unanimous Buy ratings, RIOT commands a Strong Buy consensus rating on TipRanks. The average Riot Platforms price target of $17.78 implies 126.8% upside potential from current levels. Shares have declined 49.3% so far in 2024.
