Bitfarms adopts new ‘poison pill’ after Canadian regulator terminates previous one

The Ontario Securities Tribunal has struck down the initial “poison pill” Bitfarms agreed to ward off a possible takeover attempt by rival Riot Platforms.

The Ontario Securities Tribunal, a division of the Ontario Securities Commission, has halted a shareholder rights plan implemented by Bitcoin (BTC) mining company Bitfarms after its rival Riot Platforms launched a takeover bid.

Riot Platforms CEO Jason Les called the decision “a win for all Bitfarms shareholders,” criticizing the poison pill as “yet another example of the corrupt corporate governance affecting Bitfarms and Bitfarms executives’ efforts to embed themselves.”

Bitfarms adopted its first “poison pill” — also known as a “rights plan” — in early June in response to Riot Platforms’ attempt to buy all of the company’s outstanding shares, which the Canadian miner described as “an attempt to undermine the integrity of the process and thwart the interests of third parties.”

However, shortly after the Canadian regulator finalized its first “poison pill,” Bitfarms quickly adopted another pill to “ensure that all shareholders of the company are treated fairly and equitably in connection with any unsolicited takeover bid.”

The second de facto “poison pill,” called the “new rights plan,” includes protection against so-called “stealth bids,” in which a buyer gradually accumulates 20% or more of the company’s common shares through purchases exempt from Canadian takeover bid rules. The plan will run for six months and will allow existing shareholders to purchase shares at a significant discount to market price, thus diluting any buyer’s stake if a takeover attempt is triggered.

Earlier in April, Riot Platforms offered to acquire Bitfarms for $950 million, but Riot later withdrew its offer, stating that it was unable to engage with Bitfarms’ current board of directors regarding a potential merger.