CoreWeave (NASDAQ:CRWV)'s $9 billion all-stock acquisition of data center operator Core Scientific (NASDAQ:CORZ) is facing shareholder resistance, with major investors saying they may vote against the deal unless its terms are updated, according to a Financial Times report.
The FT, citing people familiar with the matter, said the pushback stems from concerns that the current offer undervalues Core Scientific and exposes its investors to unnecessary downside risk.
Under the proposed agreement, Core Scientific shareholders would receive 0.1235 newly issued CoreWeave shares for each of their own, but without any protections if CoreWeave’s share price falls.
This scenario has materialized, with CoreWeave shares dropping more than 30% since the proposed merger was announced on July 7, reducing the implied value of the deal for Core Scientific holders from about $20.25 per share to just over $13.
Some hedge funds, including Two Seas Capital, Helix Partners Management, JAT Capital, and Parsifal Capital Management, collectively holding more than 1% of Core Scientific stock, are considering voting against the transaction, per the report.
Investors are reportedly pressing for a collar agreement to stabilize the value they would receive, particularly given CoreWeave’s volatile share performance and the pending expiry of a post-IPO lockup period on September 24 that could further pressure the stock.
The deal, announced last month, would see CoreWeave acquire Core Scientific in a move aimed at securing long-term AI infrastructure capacity while eliminating an estimated $10 billion in lease costs.
Core Scientific’s facilities account for nearly 40% of CoreWeave’s computing power in 2024, making it a critical supplier to the Nvidia-powered AI cloud provider.
CoreWeave initially made an unsolicited takeover bid for the company in June 2024 at $5.75 per share, which Core Scientific rejected as too low.
It is expected that shareholders will vote on the merger this fall, though no date has been set.
Neither Core Scientific nor CoreWeave have commented on the FT report.
Core Scientific shares traded down 1.1% at $13.50 on Tuesday, while CoreWeave stock added 1.7% at $108.