Bitcoin miner Riot Platforms is hitting back at its competitor Bitfarms’ plans to thwart a potential takeover.
Bitfarms earlier this week adopted a “poison pill” policy, effectively blocking any one shareholder from acquiring 15% or more of its shares. The move came after Riot Platforms’ disclosed last week that it planned to increase its 12% stake in Bitfarms, allowing it to institute a hostile takeover of its competitor's business.
On Wednesday, Riot announced in a filing it bought nearly 6 million shares of Bitfarms through the open market over the past week to raise its stake to 13.1%.
Riot Platforms CEO Jason Les criticized Bitfarms’ defensive strategy on Wednesday.
“Instead of engaging with us privately and in good faith, Bitfarms has responded by implementing an off-market Poison Pill with a trigger well below the customary 20% threshold,” Les said in the statement.
The hostile takeover attempt comes after Riot last month attempted to acquire all of Bitfarms’ shares for roughly $950 million in total equity value. Bitfarms turned down the offer.
Neither Bitfarms nor Riot Platforms immediately responded to The Block's request for comment.
Holding a large enough stake in a firm confers an investor with certain privileges, such as the ability to vote members onto a company’s board and install or oust members of its c-suite. As such, it's not uncommon for an investor to purposefully acquire shares in a firm in an attempt to steer its operations.
A “poison pill,” or shareholder rights plan, can thwart hostile takeovers, however. Under such a plan, a firm will issue additional shares of its stock to dilute an investor's stake in its business.
Riot and Bitfarms’ tussle for power over the latter’s business comes at a time of upheaval at Bitfarms. In May, Bitfarms CEO Geoffrey Morphy was removed from his post amid a dispute over the company's governance.
That internal turmoil has fueled Riot's push to secure control over its competitor, according to its CEO.
“We will continue to push to address the serious corporate governance issues at Bitfarms and ensure that shareholders have a say on the Company’s path forward,” Les said.
Bitfarms stock (ticker BITF) was trading at $2.45 at the time of writing, up 7.8% on the day.