Key Takeaways
- A major proxy advisor Institutional Shareholder Services on Monday panned the CoreWeave-Core Scientific deal ahead of a shareholder vote at the end of the month.
- Core Scientific shares rose Tuesday following the news, while CoreWeave’s sank.
A major AI power coupling is in jeopardy. Why? Because the price, it seems, is not right.
That’s effectively what proxy advisor Institutional Shareholder Services, or ISS, on Monday said of CoreWeave’s (CRWV) proposed acquisition of Core Scientific (CORZ), helping send shares of the former down, and the latter up.
“The market believes the company’s value is greater than the offer,” ISS said, recommending that Core Scientific shareholders reject the CoreWeave deal on Oct. 30.
Coreweave, the AI cloud provider with Nvidia-backing (NVDA), in July proposed a deal valued at $9 billion to acquire data center operator Core Scientific in an all-stock transaction. But heightened appetites for AI-related investments drove stocks higher, including Core Scientific’s, making the offer look less lucrative.
Why This Matters to Investors
A pending shareholder vote on CoreWeave’s planned acquisition of Core Scientific, a deal struck in July, could offer insight into investors’ views of the market for AI technology. If they shoot it down, it could signal a belief that better deals are out there—though CoreWeave execs on Tuesday said their offer stands.
Some investors have taken note. At least one major shareholder—Two Seas Capital, which has a 6.2% stake in Core Scientific—plans to vote against the deal.
CoreWeave chief Michael Intrator has said multiple times that the company would not be sweetening its offer, a position he reaffirmed Tuesday. “Everything has a value, and the number we put out is the value we’re willing to pay for them under all circumstances,” he said in an interview with CNBC.
Neither of the companies responded to Investopedia’s queries asking whether they would pursue other deals in the event shareholders reject this one in time for publication. The July merger agreement included a breakup fee of 4% of the transaction value.
CoreWeave’s shares fell roughly 5% Tuesday morning, but were more recently off about 3%. Core Scientific’s stock is up nearly 3%.
