Core Scientific’s largest active shareholder, Two Seas Capital, plans to block the $9 billion all-stock sale to CoreWeave, citing the offer as “inadequate” and risky for existing shareholders. The deal values each Core Scientific share at 0.1235 of a CoreWeave share, but CoreWeave stock has since dropped by 26-30%.

Two Seas Capital is disappointed in the sale price, arguing that it favors CoreWeave over Core Scientific shareholders. The stock fell 30% after the deal was announced, reflecting wider investor concerns. CoreWeave’s stock drop has led to a reduced effective valuation of just over $13 per share, while Core Scientific shares saw a modest recovery.

The situation is common in all-stock deals, with distressed debt investors like Two Seas Capital being more activist in defending their rights. Investors may push for more cash consideration or a different merger ratio. CoreWeave may resist due to its interest in using its inflated stock as currency, despite concerns of an inflated valuation.

CoreWeave’s inflated stock value, especially with an upcoming IPO lockup expiration, is a key concern for investors. A shareholder vote on the deal is expected later this year, potentially adding volatility to both companies’ shares. Investors are closely watching the situation unfold.

Read more at Yahoo Finance: Core Scientific’s Top Investor to Vote Against CoreWeave’s ‘Inadequate’ $9B Takeover