Core Scientific Shareholders Reject $9 Billion CoreWeave Merger in AI Infrastructure Power Play

AI mania tanks CoreWeave's Core Scientific acquisition; it buys Python notebook Marimo | TechCrunch

Core Scientific shareholders on Thursday voted down an all-stock acquisition offer from partner and competitor CoreWeave that was valued at the time at $9 billion. They did so following a vote-no recommendation from their largest shareholder, Sina Toussi of Two Seas Capital, a firm that focuses on post-bankruptcy companies. Core Scientific emerged from its bankruptcy in January 2024. Core Scientific, which began as a crypto miner and still is one, shares that early history with AI data center provider CoreWeave, which also started as a miner. But CoreWeave, with investor and partner Nvidia, has now transitioned to serving AI workloads. From its IPO until now, its stock has soared from a $14 billion market cap to $66 billion today (about $140 per share) as investors view it as a way to get in on the AI action. It has been spending those shares on acquisitions. CoreWeave had already signed a $10 billion, 12-year contract with Core Scientific to use its facilities for AI services, even as it nailed down a deal announced in July to buy the company outright. The offer was a premium to Core Scientific's share price at the time. But investor Toussi thinks Core Scientific can turn into another CoreWeave on its own. "Since the transaction was announced in July, investment in AI infrastructure has accelerated, driving equity valuations of Core Scientific's peers to ever-greater heights," he wrote in his opposition letter. "Why would anyone vote for a transaction worth a mere $16.40 per share?" So investors turned down the deal and CoreWeave walked. Core Scientific's stock rose on the news, and the company is now trading at a $6.6 billion market cap. Investors turning down acquisition bids in pursuit of bigger offers is another sign that we're in - or at least headed for - an AI bubble. Meanwhile, CoreWeave is still shopping. On Thursday, it turned around and acquired Marimo, an open-source Jupyter Notebook competitor, for an undisclosed sum. PitchBook estimates Marimo has raised about $5 million. Python notebooks are dev tools that combine code, rich media, and explanatory text into a single, shareable file. They're often used for interactive data analysis as well as AI app development, helping CoreWeave as it attempts to move up the stack from hosting to AI app building.

Shareholders reject $9bn CoreWeave offer for Core Scientific

Shareholders of Core Scientific have voted down a $9bn merger with CoreWeave, a closely watched transaction in the AI data centre space that would have combined two of the hottest players in computing power. The shareholder vote on Thursday lasted about five minutes, according to one person familiar with the matter. The likelihood of the transaction getting approval appeared increasingly slim in recent weeks, as proxy advisers such as Institutional Shareholder Services recommended against the deal. Core Scientific quickly announced it had formally terminated the merger agreement after the vote. The vote tally will be released in a regulatory filing. Core Scientific leases out data centre infrastructure across the US to clients including to CoreWeave. CoreWeave had said the deal would eliminate about $10bn off its leasing expenses in subsequent years. Several Core Scientific shareholders, including the hedge fund Two Seas Capital, had argued the all-stock deal undervalued Core Scientific's long-term prospects. Shares of CoreWeave had swung wildly since the deal was announced in July, leaving Core Scientific shareholders unsure how much they would get. "Shareholders have an easy choice to make: reject the transaction and participate in one of the most incredible growth opportunities in the history of the capital markets or cut short Core Scientific's promising future to transfer significant value to CoreWeave," Sina Toussi, the founder of Two Seas, wrote in a letter to shareholders earlier this week. The collapse of the deal could hurt CoreWeave's plans to meet growth targets, which have resulted in a soaring stock price and helped it raise billions of dollars in debt. The New Jersey-based company is attempting to grow from an AI cloud hardware provider to a "full-stack" AI platform through a series of acquisitions. Its proposed acquisition of Core Scientific would have helped it secure more data centre capacity and cut costs. CoreWeave needs to grow its infrastructure rapidly to fulfil large new supplier deals with tech groups including OpenAI and Meta. Big investors in Core Scientific have had qualms about the transaction for months. As part of the deal, Core Scientific shareholders were set to receive a fixed ratio of 0.1235 newly issued CoreWeave shares without any protections if the buyer's stock fell, which many investors believed did not give enough certainty. CoreWeave's stock has been volatile in recent months, but has increased more than 230 per cent since going public earlier this year. Meanwhile, shares of Core Scientific, a former bitcoin miner, have climbed about 40 per cent this year. Two Seas Capital, which owns more than 6 per cent of Core Scientific shares, emerged as the most vocal among the deal's detractors. In August the hedge fund publicly said it planned to vote against the deal and urged other shareholders to do the same, the Financial Times previously reported.

Bitcoin Miner Core Scientific Investors Nix $9 Billion CoreWeave Merger - Decrypt

Shares of CoreWeave dipped on the news; Core Scientific's stock rose. Bitcoin miner Core Scientific shareholders have rejected a proposed $9 billion merger with AI computing company CoreWeave, Core Scientific announced on Friday, ending the potentially massive transaction in the high-power computing space. Core Scientific shareholders voted against the all-stock deal at a Thursday meeting. "Core Scientific, a leader in digital infrastructure for high-density colocation services and digital asset mining, today announced that at a special meeting of Core Scientific stockholders held earlier today, the Company did not receive the requisite number of votes to approve the previously announced merger agreement with CoreWeave," an announcement read. Shares of Nasdaq-listed CoreWeave, which focuses on AI cloud-computing, was trading nearly 4% lower Thursday, according to Yahoo Finance. Core Scientific stock rose 0.3% higher. Decrypt reached out to Core Scientific for comment. In a statement shared with Decrypt, CoreWeave co-founder and CEO Michael Intrator said the firm respected the views of Core Scientific stockholders and "look[s] forward to continuing our commercial partnership." The deal, first announced in July, would have given CoreWeave 1.3 gigawatts of gross power across Core Scientific's national data center footprint, with the potential to expand gradually with another 1 GW. At the time, CoreWeave's Intrator said the deal would help "enhance our performance and expertise as we continue helping customers unleash AI's full potential." And Core Scientific President and CEO Adam Sullivan said the deal would help the miner "accelerate the availability of world-class infrastructure for companies innovating with AI while delivering the greatest value for our shareholders." But Core Scientific investors had qualms, believing the deal undervalued the Bitcoin miner. Mining Bitcoin has grown increasingly difficult and expensive. The process has also generated smaller rewards since last year's halving cut the Bitcoin earned from 6.250 to 3.125. These trends have hurt profitability, even as Bitcoin's price has risen, prompting miners to look for new revenue sources. Miners have often had to sell coins or branch into different industries -- like high-performance computing for artificial intelligence -- to cover operational costs.

Core Scientific shareholders dismiss $9B CoreWeave deal over valuation worries - SiliconANGLE

Core Scientific shareholders dismiss $9B CoreWeave deal over valuation worries Core Scientific Inc. shareholders have voted down a proposed $9 billion takeover bid by CoreWeave Inc., claiming that the acquisition undervalued the data center company. The takeover offer, announced in July, would have seen Core Scientific shareholders exchange each of its shares for roughly 0.1235 shares of CoreWeave Class A stock. CoreWeave pitched the merger as a strategic play to expand its footprint in high-performance data centers while gaining access to Core Scientific's U.S. infrastructure footprint, including more than 1 GW of operational capacity. Core Scientific investors, however, balked at the valuation and structure and argued that the all-stock deal undervalued Core Scientific's recent recovery and growth potential in the booming artificial intelligence colocation market. The decision to reject the offer didn't come as a great surprise, as activist shareholders, led by Two Seas Capital LP, urged peers to vote against the deal. According to Reuters, proxy advisor Institutional Shareholder Services also recommended a no vote, contending that Core Scientific should continue going alone given its considerable success as a standalone company. Other concerns raised by shareholders included that the all-stock deal exposed them to potential downside risk if CoreWeave's share price, which has been volatile since its March Nasdaq listing, were to decline before or after closing. In a statement, Michael Intrator, co-founder, chairman and chief executive officer of CoreWeave, said that "We respect the views of Core Scientific stockholders and look forward to continuing our commercial partnership" and that "CoreWeave's strategy remains unchanged. We will continue to execute with discipline against our roadmap to create long-term shareholder value, including through opportunistic and strategic mergers and acquisitions." Founded in 2017, Core Scientific started as a company building data centers for cryptocurrency mining before expanding its model into a broader digital-infrastructure provider. Core Scientific today offers high-density colocation and hosting services for third-party clients and markets itself as a provider of computing infrastructure optimized for AI, machine learning and cloud workloads. The company offers high power-density racks, rapid deployment capability and large footprints of contracted power with more than 1,300 MW of contracted power capacity. While having diversified beyond cryptocurrency mining alone, Core Scientific still supports crypto-mining operations while increasingly growing revenue streams from colocation contracts with enterprise and AI-compute customers. Notably, one of its largest customers is CoreWeave, which relies on Core Scientific data centers to power its public cloud, which is optimized to run AI workloads.

CoreWeave Offered a Crypto Miner $9 Billion to Gain Data Centers -- But Got Rejected

Shareholders voted against the deal, despite support from Core Scientific's board. Crypto miner Core Scientific terminated a $9 billion deal yesterday for its sale to AI cloud-computing company CoreWeave. After months of investor and proxy campaigns battling the agreement, shareholders voted against the proposal. While CoreWeave shares fell 3.9 percent in afternoon trading, the price of Core Scientific's stock rose slightly. The deal was first announced in July, with CoreWeave hoping to obtain the energy and data center capacity needed to power its raising demand. CoreWeave already rents data centers and computing power from Core Scientific, so the acquisition meant it would own those spaces, opening up opportunities to scale its business. On October 15, Core Scientific's board urged shareholders to vote for the agreement, stating it had "unanimously determined" the deal would be optimal for stockholders. But Two Seas Capital, which claims to be the largest of Core Scientific's active shareholders, said it would vote against the deal on the basis of sale process, deal structure, and valuation concerns. The advisor said the sale "materially undervalues" Core Scientific, and warned that the fixed exchange ratio would expose its shareholders to the price performance of CoreWeave's shares. Another proxy advisory firm, Institutional Shareholder Services, vocalized a similar stance. It suggested Core Scientific remain a standalone company per its recent success. Yesterday wasn't the first time Core Scientific has ended a deal. In June 2024, the company turned down CoreWeave's all-cash buyout offer. Some analysts hypothesize that shareholders believe their companies are worth more right now because of the current high stock values of AI companies. "[Shareholders] believe their value should be higher based on current valuations of comparable companies, which we see as more a sign of AI trade froth than actual economic value," said Gil Luria, analyst at financial services partner D.A. Davidson. Michael Intrator, co-founder, chairman, and CEO of CoreWeave, commented on the terminated deal in a Thursday press release. "We respect the views of Core Scientific stockholders and look forward to continuing our commercial partnership," he says. "CoreWeave's strategy remains unchanged. We will continue to execute with discipline against our roadmap to create long-term shareholder value, including through opportunistic and strategic M&A."