On Wednesday, Stifel Canada adjusted its stance on Bitfarms Ltd. (NASDAQ:BITF), moving the rating from Speculative Buy to Hold, while also reducing the price target to $2.30 from the previous $3.25. This change comes in the wake of RIOT Platforms Inc.'s (RIOT-N) attempted acquisition of Bitfarms, which was met with resistance from the latter's board.
RIOT Platforms, which has become the largest shareholder of Bitfarms with approximately a 10% stake, had proposed to purchase all outstanding shares of Bitfarms at a 20% premium. Nevertheless, Bitfarms' board did not engage in substantive dialogue regarding the offer, leading to the proposal's rejection. RIOT is now looking to propose changes to Bitfarms' board through a special meeting requisition.
The analyst from Stifel Canada highlighted concerns about underlying issues at the board level of Bitfarms, which may have contributed to the downgrade decision. The lack of engagement from Bitfarms' board could signal potential difficulties for any future acquisition attempts by other companies, considering RIOT's significant ownership position.
Despite the rejected offer, the analyst pointed out that RIOT is strategically well-placed to benefit from the current situation. The proposed combination of RIOT and Bitfarms was seen as potentially advantageous, given the scaled operations and access to low-cost power that would result. However, the reduced price target and rating downgrade reflect the uncertainties surrounding Bitfarms' receptiveness to acquisition and the broader implications for its future.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.