Bitcoin Miner Core Scientific’s Third Largest Shareholder Opposes CoreWeave Deal
Two Seas Capital, a significant shareholder in Core Scientific (CORZ) holding 6.3% of its stock, has publicly opposed Core Scientific’s proposed all-stock acquisition by CoreWeave (CRWV). This opposition, detailed in a letter released Thursday, signals a potential major hurdle for the deal announced on July 7th. Two Seas plans to actively dissuade other shareholders from approving the acquisition unless substantial revisions are implemented.
The core of Two Seas’ objection lies in the structure of the proposed transaction: an all-stock deal without any downside protection (uncollared). They argue this structure significantly undervalues Core Scientific and unfairly benefits CoreWeave. Sina Toussi, founder of Two Seas, stated that the sale “materially undervalues the company and unnecessarily exposes its shareholders to substantial economic risk.” This sentiment is underscored by CORZ’s current trading price of $14.24, considerably below the approximate $20 value implied by the acquisition terms four weeks prior.
Two Seas’ commitment to Core Scientific extends back to 2022, including participation in post-bankruptcy restructuring and funding rounds. Despite this history and a concurrent investment in CoreWeave, acknowledging the potential synergy of a combination, Two Seas believes the current offer is inadequate. The 30% drop in Core Scientific’s stock price following the deal announcement is cited as clear evidence of widespread investor apprehension.
The firm’s preference is for Core Scientific to remain independent unless a superior offer materializes. However, Two Seas hasn’t completely shut the door on a deal with CoreWeave. They’ve explicitly stated their willingness to consider alternative bids from CoreWeave, but only under conditions that accurately reflect Core Scientific’s strategic assets and growth potential. This suggests a negotiation tactic, aiming to pressure CoreWeave into a more favorable arrangement for Core Scientific shareholders.
Two Seas intends to release further detailed analysis in the coming weeks and actively engage with other shareholders to build support for their position. This proactive approach, coupled with earlier predictions by KBW analysts highlighting potential shareholder resistance due to the unchanged asset base and lack of cash in the transaction, points to a significant challenge for CoreWeave in completing the acquisition.
