Core Scientific, a prominent mining company listed on the stock market, recently turned down a surprise buyout proposal from Coreweave, a provider of AI computing and cloud services, on June 3rd.
In a statement released to the public, Core Scientific revealed that their board carefully considered the unexpected offer of $5.75 per share and ultimately decided to reject it, citing a undervaluation of the company. The company stated that the deal did not align with the best interests of both the company and its shareholders.
The offer came after a series of business agreements between the two companies, with the most recent one allowing Coreweave to utilize 18% of Core Scientific’s infrastructure for a duration of 12 years. This arrangement was made in an effort by Core Scientific to diversify its revenue streams, by leasing one of its tier-3 data centers to Coreweave in March 2023. The data center, situated in Austin, Texas, provides 16 megawatts of capacity for Coreweave’s high-performance AI computing services.
Core Scientific had previously filed for Chapter 11 Bankruptcy in December 2022 during the cryptocurrency market downturn. The company, like many others in the mining industry, faced challenges such as high energy costs, low Bitcoin prices, and industry-wide bankruptcies due to excessive debt and unfavorable market conditions.
Following a restructuring process lasting 13 months, Core Scientific was relisted on stock exchanges in January 2024. However, the company’s stock value dropped by 30% shortly after the relisting. Despite this setback, the stock price remained below the peak of $6.10 per share recorded at the time of the relisting throughout the period from January to May.
Towards the end of May and the beginning of June, Core Scientific’s fortunes changed as the company reported improved financial performance for the first quarter of 2024, generating $179.3 million in total revenues. This positive news led to a surge in the company’s stock price, reaching a new high since the relisting and currently trading around $8.02.
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