Core Scientific Shareholders Reject $9 Billion CoreWeave Merger Deal

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.