Top Core Scientific shareholders mulling “revolt” against CoreWeave deal: Report
The Financial Times is reporting that some of the “top shareholders” of Core Scientific are crying foul over the terms of its all-stock takeover by CoreWeave and are planning on voting against the deal.
“Multiple funds” told the FT they’d be more comfortable with the deal if there were a separate measure in the arrangement that put a floor under the ultimate value Core Scientific would receive in the event that CoreWeave’s shares fell a lot from here (that is, a collar agreement).
Under the terms of the agreement, Core Scientific shareholders will receive 0.1235 shares of CoreWeave upon the closing of the deal.
At the time the news broke, that put the acquisition price at about $9 billion. But shares of CoreWeave are down nearly 34% since that time, while the S&P 500 is slightly higher over this period.
The post-IPO lockup period for the lion’s share of CoreWeave holders expires in mid-August, shortly after the company reports its second-quarter results.
We detailed the tricky situation Core Scientific’s brass put their shareholders in a month ago...
In sum, Core Scientific’s management:
Hitched their wagon to CoreWeave to trade at a premium to what it otherwise would;
Created a situation where CoreWeave’s issuance of shares for this deal, all else equal, would be expected to put some downward pressure on that company’s stock and be priced in ahead of the event (and perhaps already fully has been), lowering the ultimate value they’ll be getting for selling the company;
Knows that this transaction will take place after a potentially negative catalyst for the acquiring company (the end of the IPO lockup), which may put some additional downward pressure on the shares;
And by all appearances left no practical way for shareholders or potential shareholders to arb this away for a while, when 2) and 3) may have already rendered the point somewhat moot.
...and it looks like the hedge funds along for the ride are none too pleased about how this has all played out.
