(Reuters) -Bitcoin miner Bitfarms said on Monday it had approved the adoption of a “poison pill” to fend off a potential hostile takeover attempt by rival Riot Platforms.
The move comes days after Riot Platforms disclosed it had built a 12% stake in Bitfarms as it pursues a takeover attempt.
Riot had initially made a private proposal to buy Bitfarms in April. The proposal was rejected by Bitfarms’ board after it concluded that the offer “significantly undervalued” the company.
Colorado-based Riot went public with its proposal in May to buy the bitcoin miner for about $950 million and said it intends to request a special shareholder meeting to add independent directors to Bitfarms’ board.
U.S.-listed shares of Bitfarms were down 2.5% in premarket trading.
Under Bitfarm’s plan, if an entity accumulates more than 15% of Bitfarms’ stake after June 20 and up to Sept. 10, the company would issue fresh shares, diluting the entity’s stake.
After Sept. 10, the threshold would be relaxed to 20% as long as any takeover attempt meets certain conditions.
Shareholder rights plans, known as “poison pill,” are used by corporate boards to thwart hostile takeover bids.
Bitfarms said the shareholder rights plan aimed to preserve the integrity of its previously announced strategic alternatives review process.
The bitcoin miner started conducting a strategic alternatives review last month after receiving Riot’s proposal. The review includes a possible merger or sale of the company.
The rights plan is subject to shareholder ratification within six months of its adoption, failing which it will terminate, Bitfarms said.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Tasim Zahid)
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