Core Scientific shareholders reject CoreWeave’s $9B merger proposal
Core Scientific (CORZ) shareholders on Thursday voted in a special meeting to reject CoreWeave’s (CRWV) $9 billion acquisition proposal, ending what had become an increasingly contentious battle over the terms of the deal.
Core Scientific announced that after the company had not received the necessary votes to approve the acquisition, it “terminated the merger agreement with CoreWeave, effective immediately.”
In an investor’s call after the special meeting, Core Scientific president and CEO Adam Sullivan said that the company’s shareholders had “voted decisively” to reject the deal.
He thanked the shareholders for their "engagement and candid feedback throughout this process,” saying that it had been “clear” that the shareholders “understood overwhelmingly the industrial logic behind the combination with CoreWeave including how it would create a stronger combined company with significant financial synergies.”
“And while there was criticism around how the deal was structured, it was designed specifically to provide upside value potential for our shareholders with CoreWeave stock,” Sullivan added.
He claimed that CoreWeave’s refusal to renegotiate the terms of the transaction “confirms that our board negotiated the best deal possible for our shareholders.”
“That said, the outcome of the vote ultimately reflects broader market dynamics given the demand and valuation changes over the past four months, as well as the recent performance of CoreWeave’s stock,” Sullivan said.
He noted that the company’s partnership with CoreWeave “remains exceptionally strong” and would continue as a “purely a commercial one” that could generate about $10 billion in revenue potential over the next 12 years.
All-stock deal seen as too risky
Two Seas Capital was the first Core Scientific stockholder to publicly announce its opposition to the deal, filing a proxy statement at the end of September calling on its fellow shareholders to reject the proposal.
Two Seas founder and CIO Sina Toussi said in the proxy statement that the all-stock nature of the transaction was being done at “an inadequate valuation.”
“The proposed all-stock, uncollared structure leaves Core Scientific shareholders exposed to the high volatility of CoreWeave's share price with no protections on the value they will receive at or following close,” Toussi said.
In a statement after the vote, Toussi thanked his fellow shareholders for “the fact that so many of you recognize the value of Core Scientific and share our enthusiasm for the Company's bright future.”
He said that the “value creation initiatives” that Sullivan outlined in the call “reinforced our confidence in the Company's executive management team and their ability to capitalize on the Company's outstanding assets and competitive advantages.”
“Now is the time to focus on the road ahead and for Core Scientific's management team to get back to the important work of growing the Company's power pipeline, securing additional contracts and building next generation data centers,” Toussi said. “Core Scientific has been a pioneer in the AI infrastructure build-out and we are excited for this growth story to continue.”
CoreWeave CEO Michael Intrator dismissed Two Seas’ argument that a stand-alone value-creation plan is superior for Core Scientific than CoreWeave’s offer.
“The combination with CoreWeave will de-risk Core Scientific’s standalone plan, which involves significant near-term capital expenditures and execution risks associated with securing power, customers and financing, which will require Core Scientific to pursue substantial debt and/or dilutive equity,” Intrator said in an open letter to Core Scientific shareholders earlier this month.
However, Matthew Siegel, head of digital assets research for ETF and mutual fund manager Van Eck, said in a post on X last week that the firm had increased its stake in Core Scientific and also planned to vote against the proposed acquisition.
“Must be an uncomfortable morning for the $CORZ board,” Siegel said on Thursday in response to the proposed merger failing, a likely reference to the fact that Core Scientific’s board had unanimously approved CoreWeave’s proposal.
“Five members, thin continuity, and mounting shareholder momentum,” Siegel added. “This board may soon face its own restructuring.”
Meanwhile, Intrator said in a statement that the company respected the shareholder’s decision and that it looked forward “to continuing our commercial partnership” with Core Scientific.
“CoreWeave’s strategy remains unchanged,” he said.” We will continue to execute with discipline against our roadmap to create long-term shareholder value, including through opportunistic and strategic M&A.”
The company’s continued pursuit of “opportunistic and strategic M&A” deals shows no sign of slowing down: CoreWeave announced on Thursday that it had acquired AI software company Marimo.
Terms of the acquisition were not disclosed.
Core Scientific’s stock was mostly flat on Thursday, but rose 2% in after-hours trading. CoreWeave’s stock fell 6.3%, but gained 2.2% in after-hours trading.