AI hyperscaler CoreWeave’s (CRVW) planned $9 billion acquisition of data infrastructure provider Core Scientific (CORZ) is running into unexpected resistance from investors who aren’t sold on the terms of the deal.
Announced last month, the all-stock transaction would bring much of CoreWeave’s data center needs for large-scale AI development in-house.
The company said it would inherit roughly 1.3 GW of gross power across Core Scientific’s national footprint, with an additional 1 GW+ available for expansion.
CoreWeave pitched the deal as a way to slash “over $10 billion of cumulative future lease overhead” it otherwise would have paid Core Scientific over the next 12 years.
The merger was slated to close in the fourth quarter pending regulatory and shareholder approval. That shareholder approval now looks shaky.
Shareholders bristle at all-stock deal
According to sources familiar with the matter, several of Core Scientific’s top investors plan to vote against the merger unless its terms change.
The sticking point is the fixed exchange ratio: 0.1235 newly issued CoreWeave shares per Core Scientific share, with no protections if CoreWeave’s stock drops before closing.
And drop it has, with CoreWeave’s stock falling more than 30% since the July 7 announcement. That decline has shaved Core Scientific’s share price from $20 per share at signing to just over $13 now.
“The powers that be at CoreWeave know they got a fantastic deal,” one shareholder told the FT. “They were able to issue back less than 10% of their company to buy back their biggest data center counterparty.”
Hedge funds want a collar
Hedge funds leading the revolt include Parsifal Capital Management, Helix Partners Management, Two Seas Capital, and JAT Capital.
According to sources cited by the FT, they want a “collar agreement” added to the merger terms, which is a mechanism to limit downside risk for shareholders in an all-stock deal.
Wall Street initially applauded the acquisition as a savvy way for CoreWeave to rein in spending. With Core Scientific as its largest client, analysts saw the move as effectively paying for itself through future lease savings.
So far, neither CoreWeave nor Core Scientific has commented on investor pushback.
Meanwhile, CoreWeave has been expanding aggressively. In June, it signed two 15-year leases with Applied Digital (APLD) to secure 250 MW of IT load at a North Dakota data center to power its AI and high-performance computing operations.
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