RIOT Offers to Acquire Bitfarms at US$2.30/Share

Riot Platforms, Inc. (NASDAQ: RIOT) has proposed to acquire all outstanding shares of Bitfarms Ltd. (NASDAQ/TSX: BITF) at a price of US$2.30 per Bitfarms common share. Riot has acquired a 9.25% stake in Bitfarms, making it the largest shareholder. The proposed acquisition represents a 24% premium to Bitfarms' one-month volume-weighted average share price as of May 24, 2024, and a 20% premium to Bitfarms' share price on April 19, 2024.

The consideration offered to Bitfarms' shareholders under the proposal consists of cash and Riot common stock, resulting in Bitfarms' shareholders owning up to approximately 17% of the combined company. The proposal represents approximately US$950 million in total equity value.

The proposed combination aims to create the largest publicly listed bitcoin miner globally, with approximately 1 GW of current power capacity and 19.6 EH/s of self-mining capacity, projected to increase to up to 1.5 GW of power capacity and 52 EH/s of self-mining capacity by year-end.

Furthermore, the proposed combination would provide geographic diversification of sites across the United States, Canada, Paraguay, and Argentina, with up to 2.2 GW of total power capacity when fully developed.

Riot's strong financial profile, including de minimis corporate debt and more than US$700 million in cash on hand, as well as its 8,872 unencumbered bitcoins as of April 30, 2024, are expected to drive future growth for Bitfarms, enabling Riot to fully finance Bitfarms' growth plans.

The proposal has been unanimously approved by Riot's board of directors and is non-binding, subject to customary conditions including entering into a definitive transaction agreement.

In response to Bitfarms' swift rejection of the proposal, Riot intends to requisition a special meeting of Bitfarms' shareholders to add new, independent directors to the Bitfarms board. Riot raised serious governance questions, citing the abrupt termination of Bitfarms' CEO without a transition plan in place and the allegations made in a lawsuit filed by the recently terminated CEO against certain members of Bitfarms' board.

The proposal is backed by financial advisor Citi and legal advisors Paul, Weiss, Rifkind, Wharton & Garrison LLP and Davies Ward Phillips & Vineberg LLP.

Riot's vision is to be the world's leading bitcoin-driven infrastructure platform and it believes that the proposed combination with Bitfarms would create significant benefits for both companies' stakeholders.

The proposal is a non-binding offer and is subject to the approval of the respective boards of directors and the finalization of mutually acceptable arrangement and support agreements. As a result of these announcements, the company's shares have moved -0.6% on the market, and are now trading at a price of $10.3. For the full picture, make sure to review Riot Platforms's 8-K report.

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