Core Scientific Shareholders Resist $9 Billion CoreWeave Merger, Citing Undervaluation and Risk

Core Scientific's shareholders balk at terms of CoreWeave merger offer, FT reports

Aug 5 (Reuters) - CoreWeave's (CRWV.O), opens new tab proposed $9 billion acquisition of data centre landlord Core Scientific (CORZ.O), opens new tab is facing potential revolt, as some top shareholders of the target firm argue the deal may leave them short-changed, the Financial Times reported. Some major Core Scientific shareholders plan to vote against the deal unless the terms are revised in the coming weeks, the report said on Tuesday, citing people familiar with the matter. Reuters could not immediately verify the report. CoreWeave and Core Scientific did not immediately respond to Reuters request for a comment outside regular business hours. The shareholder vote for Core Scientific has not yet been scheduled but is expected to take place sometime this autumn, the report said. The all-stock deal, valued at about $9 billion and announced last month, highlights the race among AI infrastructure firms to secure the energy and data center capacity required to meet surging demand. CoreWeave, which provides access to data centers and Nvidia-powered AI chips, initially submitted an unsolicited, non-binding takeover offer to Core Scientific in June 2024. However, the company rejected the offer, citing that its business was significantly undervalued. Reporting by Gursimran Kaur in Bengaluru; Editing by Sonia Cheema and Sherry Jacob-Phillips Our Standards: The Thomson Reuters Trust Principles., opens new tab

Core Scientific's Top Investor to Vote Against CoreWeave's 'Inadequate' $9B Takeover - Decrypt

A shareholder vote later this year will coincide with CoreWeave's IPO lockup expiry, potentially adding volatility to both stocks. Core Scientific's largest active shareholder is moving to block the miner's proposed $9 billion all-stock sale to AI infrastructure provider CoreWeave, calling the offer "inadequate" and unfavorable to existing shareholders. The proposed sale "materially undervalues" the company and unnecessarily exposes its shareholders to substantial economic risk, New York-based Two Seas Capital, the largest active shareholder in Core Scientific with about a 6.3% stake, said in a statement Thursday. Two Seas Capital voiced how it was "disappointed" at the choice of selling at an "inadequate valuation," arguing that the all-stock, uncollared structure leaves shareholders exposed to CoreWeave's volatile share price with no value protections. The hedge fund claims the $9 billion deal "decidedly and unfairly favors CoreWeave" at the expense of Core Scientific shareholders like them, noting that the company's stock fell 30% in the days after the transaction was announced, a move it says reflects broader investor concern. Announced last month, the deal pegs each Core Scientific share to 0.1235 of a CoreWeave share, which at the time implied a value of about $20.4 per share. CoreWeave's stock has since fallen by between 26% and 30%, reducing the effective valuation to just over $13 per share. Core Scientific shares, meanwhile, showed a modest recovery in intraday trading on Thursday, rising 1.7% to $14.35, Google Finance data shows. The drop has sharpened scrutiny of the deal's terms, with some investors pointing to patterns seen in other contested all-stock mergers. The situation is common in all-stock deals, especially when large shareholders began as "distressed debt investors" who converted bonds into equity in a reorganization, according to Jeffrey Emanuel, founder and CEO of blockchain infrastructure firm Pastel Network. "Those investors tend to lean more activist and are more aggressive in defending their rights, as is the case here," Emanuel told Decrypt. Investors against a stock transaction will "either want more of the consideration to be in the form of cash or a less volatile security (e.g., preferred equity), or they will want a more favorable merger ratio," he added. Still, CoreWeave would likely be "unwilling to do those things because it's in their interest to use their inflated stock as a currency," he said. What is at issue, instead, is the "wildly inflated valuation" of CoreWeave stock, Emanuel said, particularly with its IPO lockup set to expire in a month, a milestone he expects will "likely put pressure on the share price." A shareholder vote on the deal is expected later this year, a timing that could add volatility to both companies' shares.

Core Scientific's largest shareholder to vote against CoreWeave buyout offer

The shareholder letter by Two Seas Capital says the buyout offer undervalues Core Scientific's business. Two Seas Capital, the largest active shareholder of Bitcoin mining company Core Scientific, announced its intention to vote against the buyout offer proposed by AI infrastructure company CoreWeave. The investment company holds a 6.5% stake in Core Scientific and said the $9 billion valuation deal, finalized in July, undervalues the business. The shareholders wrote on Thursday: "The proposed sale materially undervalues the Company and unnecessarily exposes its shareholders to substantial economic risk. In our view, the transaction decidedly and unfairly favors CoreWeave at the expense of Core Scientific shareholders. The fact that Core Scientific's stock price declined by 30% in the days following the transaction announcement strongly suggests to us that other investors agree," the letter reads. CoreWeave has been eyeing the acquisition of Core Scientific since 2024, as investors keep an eye on both companies for signs of a closed deal. CoreWeave leases AI data centers from Core Scientific. By acquiring Core Scientific, CoreWeave can significantly expand its data center capacity and support the growing demand for AI infrastructure. "As the need for AI training and inference has grown, the demand for energy and HPC infrastructure has increased dramatically," Two Seas Capital said in a statement. "Core Scientific... is uniquely positioned to meet this growing demand and has a clear runway to compound growth for many years." Related: Parataxis to go public in $640M SPAC merger with Silverbox Shares of Core Scientific rose by 3% to $14.38 following the publication of the shareholder letter. CoreWeave's stock also surged during intraday trading on Thursday, rising nearly 9% at time of writing. CoreWeave made several offers to buy Core Scientific, including its latest $9 billion bid in July, all of which were initially rejected as too low. The deal's progress stalled until talks between the companies were revived in June, sending Core Scientific's stock soaring by over 23% in a single day, before retracing in July. CoreWeave has a market capitalization of over $58.1 billion, while Core Scientific's market cap is over $4.3 billion at the time of this writing.

Core Scientific's shareholders balk at terms of CoreWeave merger offer: FT - The Economic Times

Some major Core Scientific shareholders plan to vote against the deal unless the terms are revised in the coming weeks, the report said on Tuesday, citing people familiar with the matter. The shareholder vote for Core Scientific has not yet been scheduled but is expected to take place sometime this autumn, the report said.CoreWeave's proposed $9 billion acquisition of data centre landlord Core Scientific is facing potential revolt, as some top shareholders of the target firm argue the deal may leave them short-changed, the Financial Times reported. Some major Core Scientific shareholders plan to vote against the deal unless the terms are revised in the coming weeks, the report said on Tuesday, citing people familiar with the matter. Reuters could not immediately verify the report. CoreWeave and Core Scientific did not immediately respond to Reuters request for a comment outside regular business hours. The shareholder vote for Core Scientific has not yet been scheduled but is expected to take place sometime this autumn, the report said. The all-stock deal, valued at about $9 billion and announced last month, highlights the race among AI infrastructure firms to secure the energy and data center capacity required to meet surging demand. CoreWeave, which provides access to data centers and Nvidia-powered AI chips, initially submitted an unsolicited, non-binding takeover offer to Core Scientific in June 2024. However, the company rejected the offer, citing that its business was significantly undervalued.

Two Seas Capital Opposes Core Scientific-CoreWeave Merger, Calls Deal Undervalued, Risky For Shareholders - CoreWeave (NASDAQ:CRWV), Core Scientific (NASDAQ:CORZ)

Two Seas Capital, the largest active shareholder of Core Scientific Inc CORZ, on Friday announced it will vote against the proposed all-stock acquisition by CoreWeave CRWV, citing a significantly undervalued offer and structural flaws that expose shareholders to undue risk. In an open letter released on Thursday, the New York-based investment firm disclosed it holds more than 19.1 million shares, approximately 6.3% of Core Scientific's outstanding stock and criticized the terms of the July 7 deal, particularly the uncollared, all-stock structure, which leaves Core Scientific shareholders vulnerable to CoreWeave's share price volatility. The firm emphasized it is not opposed to a merger in principle and even holds a position in CoreWeave. It stressed that the proposed terms overwhelmingly benefit CoreWeave and fail to reflect the strategic value of Core Scientific's assets, including its infrastructure footprint and positioning in the high-performance computing (HPC) sector. Also Read: Stablecoins Under Fire In China, While US Enacts A Federal Stablecoin Law Two Seas called attention to Core Scientific's strategic importance in the AI infrastructure landscape, highlighting its low-cost power access, data center expertise, and growth potential amid soaring demand for AI-related computing. Get StartedTrade Bitcoin, Ethereum, and More Instantly -- No Wallets, No Hassle Speculate on price movements, claim up to $200 in bonuses, and start with risk-free paper trading with crypto futures on Plus500. Get StartedDisclosure: 82% of retail CFD accounts lose money The firm underscored that the company is well-positioned to operate independently and capitalize on market tailwinds. The letter also noted a sharp 30% drop in Core Scientific's stock following the acquisition announcement, which Two Seas interpreted as a broader market rejection of the deal. Unless significant changes are made to the valuation and structural terms, the firm intends to rally other shareholders to vote against the deal. While Two Seas welcomed other potential suitors, including CoreWeave, it urged Core Scientific's board to demand a price that fairly incorporates the company's long-term strategic value and any synergies created through a merger. Read Next: * Trump Opens 401(k) Plans To Crypto, Cracks Down On Crypto Banking Discrimination Photo: mojo cp via Shutterstock CORZCore Scientific Inc$14.28-0.52%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum81.60GrowthN/AQualityN/AValue17.05Price TrendShortMediumLongOverviewCRWVCoreWeave Inc$126.474.45%Market News and Data brought to you by Benzinga APIs

Core Scientific's shareholders balk at terms of CoreWeave merger offer, FT reports

(Reuters) -CoreWeave's proposed $9 billion acquisition of data centre landlord Core Scientific is facing potential revolt, as some top shareholders of the target firm argue the deal may leave them short-changed, the Financial Times reported. Some major Core Scientific shareholders plan to vote against the deal unless the terms are revised in the coming weeks, the report said on Tuesday, citing people familiar with the matter. Reuters could not immediately verify the report. CoreWeave and Core Scientific did not immediately respond to Reuters request for a comment outside regular business hours. The shareholder vote for Core Scientific has not yet been scheduled but is expected to take place sometime this autumn, the report said. The all-stock deal, valued at about $9 billion and announced last month, highlights the race among AI infrastructure firms to secure the energy and data center capacity required to meet surging demand. CoreWeave, which provides access to data centers and Nvidia-powered AI chips, initially submitted an unsolicited, non-binding takeover offer to Core Scientific in June 2024. However, the company rejected the offer, citing that its business was significantly undervalued. (Reporting by Gursimran Kaur in Bengaluru; Editing by Sonia Cheema and Sherry Jacob-Phillips)