Core Scientific Rejects Unsolicited Proposal from CoreWeave
Core Scientific, a leading provider of digital infrastructure for bitcoin mining and hosting, has rejected an unsolicited proposal from CoreWeave offering $5.75 per share in cash.
The Board, after consulting financial and legal advisors, deemed the offer undervalued and not in shareholders' best interests.
Core Scientific emphasized its ongoing 12-year contracts with CoreWeave, which are expected to generate over $3.5 billion in cumulative revenue.
The company continues to focus on expanding its high-performance compute (HPC) hosting business while maintaining its bitcoin mining operations.
Shareholders are advised that no action is required.
Moelis & Company and Sidley Austin LLP are advising Core Scientific.
- Execution of 12-year contracts with CoreWeave expected to generate over $3.5 billion in cumulative revenue.
- Company has over 300 MW of additional HPC capacity available, offering potential growth opportunities.
- Predictable, recurring revenue from HPC hosting to balance the variability of bitcoin mining business.
- Steady cash flows from HPC hosting expected to strengthen earnings power and provide financial strength.
- Rejection of CoreWeave's $5.75 per share offer may raise concerns among shareholders about undervaluation.
- Potential investor dissatisfaction with the Board's decision not to pursue the acquisition proposal.
Insights
Core Scientific's rejection of CoreWeave's $5.75 per share acquisition offer suggests that the Board believes the company's intrinsic value surpasses the proposed valuation. This decision points towards significant confidence in their existing operations and future growth prospects, particularly revolving around their $3.5 billion, 12-year contracts with CoreWeave. These contracts are expected to generate substantial revenue, indicating a strong partnership and focusing on long-term value creation.
Financially, rejecting this offer also preserves the potential upside for shareholders if Core Scientific's strategies yield expected results. The focus on expanding high-performance compute (HPC) services beyond bitcoin mining could diversify revenue streams, providing stability against the inherent volatility in cryptocurrency markets. This diversification strategy strengthens their earnings potential and reduces risk, which can be advantageous for long-term investors.
The involvement of reputable advisors like Moelis & Company LLC and Sidley Austin LLP underscores the thoroughness of the Board's evaluation process. For retail investors, this demonstrates a well-considered decision aimed at maximizing shareholder value and reflects strong corporate governance practices.
From a market perspective, Core Scientific's emphasis on its high-powered digital infrastructure and HPC hosting services signifies a strategic pivot that aligns well with emerging trends in the tech industry. The ability to secure long-term contracts worth over
Core Scientific’s strategy to balance its bitcoin mining operations with more stable HPC hosting services could mitigate the risks associated with cryptocurrency market fluctuations. This move might appeal to investors looking for a blend of potential high returns with reduced volatility. Additionally, the company's ability to leverage over 300 MW of additional HPC capacity indicates substantial room for growth and future revenue potential.
Overall, the rejection of the buyout offer could be seen as a positive sign for shareholders, indicating management's belief in achieving higher valuations through their strategic initiatives.
The legal aspects surrounding the rejection of CoreWeave’s proposal are noteworthy for shareholders. The Board’s decision, aided by Sidley Austin LLP, suggests a comprehensive assessment of fiduciary duties and corporate governance principles. By stating that the proposal 'significantly undervalues' the company, the Board highlights their duty to protect shareholder interests and ensure that any acquisition reflects the true value of Core Scientific.
Furthermore, the non-binding nature of CoreWeave’s proposal implies there were no legal obligations for Core Scientific to accept or negotiate further. The absence of any immediate action required by shareholders simplifies their position, alleviating potential concerns or the need for rapid decision-making.
Understanding these legal nuances gives retail investors confidence in the Board’s prudence and commitment to maximizing shareholder value, reinforcing trust in the company’s leadership during pivotal moments.
Proposal Significantly Undervalues the Company and Is Not in the Best Interests of Core Scientific and its Shareholders
Core Scientific Remains Focused on Executing Previously Announced Series of 12-Year Contracts with CoreWeave, which Are Expected to Generate Over
No Shareholder Action Required
Core Scientific is one of the largest owners and operators of high-powered digital infrastructure for bitcoin mining and hosting services in
The Company’s Board of Directors (the “Board”), in consultation with its independent financial and legal advisors, carefully reviewed the proposal. The Board has evaluated the Company’s growth prospects and near- and long-term value creation potential, including in connection with both the previously announced CoreWeave agreements and the proposal. The Board determined that the CoreWeave proposal significantly undervalues the Company and is not in the best interests of the Company and its shareholders.
Core Scientific continues to focus on capitalizing on its valuable portfolio of high-power digital infrastructure to expand its HPC hosting business, including through the execution of the recently announced contracted projects with CoreWeave. With greater than 300 MW of additional HPC capacity available, the Company is pursuing potential future transactions with CoreWeave or other HPC customers, while maintaining its strong bitcoin mining franchise. The Company believes that the predictable, recurring revenue from HPC hosting will balance the variability of its bitcoin mining business, while also producing steady cash flows that will strengthen Core Scientific’s earnings power and provide greater financial strength and optionality.
Core Scientific shareholders do not need to take any action at this time.
Moelis & Company LLC is acting as financial advisor to Core Scientific. Sidley Austin LLP is acting as legal advisor to Core Scientific.
About Core Scientific
Core Scientific is one of the largest owners and operators of high-powered digital infrastructure for bitcoin mining and hosting services in
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “aim,” “estimate,” “plan,” “project,” “forecast,” “opportunity,” “goal,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target,” “potential,” “hope” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are provided for illustrative purposes only and are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company’s management. These forward-looking statements are not intended to serve, and must not be relied on by any investor, as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company. These forward-looking statements are subject to a number of risks and uncertainties, including those identified in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings made with the Securities and Exchange Commission, and if any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Accordingly, undue reliance should not be placed upon the forward-looking statements. The Company does not assume any duty or obligation (and does not undertake) to update or supplement any forward-looking statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240606233945/en/
Investors:
ir@corescientific.com
Media:
press@corescientific.com
For Core Scientific:
Joseph Sala / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
Source: Core Scientific, Inc.
FAQ
What was CoreWeave's offer to Core Scientific?
Why did Core Scientific reject CoreWeave's proposal?
How much revenue is expected from Core Scientific's contracts with CoreWeave?
What business strategies is Core Scientific focusing on after rejecting the offer?
Do Core Scientific shareholders need to take any action regarding the CoreWeave proposal?
