Major Shareholder Joins Opposition to CoreWeave’s Acquisition Plan
A significant shareholder in Core Scientific has publicly declared opposition to CoreWeave’s proposed $5 billion acquisition, casting uncertainty over one of the data center industry’s most substantial potential mergers this year. According to reports, Trip Miller, founder of Gullane Capital, stated he would vote against the transaction in the upcoming shareholder decision, joining other investors who have expressed concerns about the deal’s valuation and structure.
“Under the math of the deal today, I would have to vote no,” Miller told Business Insider, with sources indicating his firm holds approximately $200 million in Core Scientific stock, making Gullane the company’s third-largest shareholder behind investment giants Vanguard and BlackRock.
Deal Economics Shift as Stock Prices Fluctuate
The acquisition, initially announced in July as a stock conversion deal valuing Core Scientific at approximately $9 billion, has seen its economics shift significantly in recent months. When announced, the offer represented a 66% premium over Core Scientific’s trading price at $20.40 per share. However, analysts suggest that CoreWeave’s declining stock price and Core Scientific’s rising value have substantially altered the transaction’s attractiveness to shareholders.
According to the analysis, the current conversion values Core Scientific shares at around $17 each, more than 10% below Friday’s market price of approximately $19. This fluctuation has reportedly exacerbated investor concerns that the deal significantly undervalues Core Scientific just weeks before the scheduled October 30 shareholder vote.
Investment Firm Presents Detailed Objections
The shareholder opposition gained momentum earlier this month when Two Seas Capital, which owns about 6.3% of Core Scientific’s stock, published a comprehensive presentation outlining numerous objections to the takeover. The firm reportedly argued that the transaction doesn’t offer sufficient profitability for stockholders and lacks protection against stock price fluctuations that have undermined the deal’s original economics.
“The initial headline deal price of $20.40 per share undervalued Core Scientific’s intrinsic value and strategic value to CoreWeave,” Two Seas Capital wrote in its presentation. “Following one of the worst post-deal drawdowns in an acquirer’s stock price since 2020; the current deal value of less than $18 per share reflects a take-under of Core Scientific.”
CoreWeave CEO Defends “Best and Final” Offer
In response to mounting criticism, CEO Michael Intrator issued a strong defense of the acquisition, describing it as “the most compelling path forward for Core Scientific stockholders” and characterizing the current terms as CoreWeave’s “best and final” offer. Intrator reportedly dismissed Two Seas Capital’s complaints as “misleading and misinformed” in his October 16 letter to shareholders.
“The combination will offer Core Scientific and CoreWeave stockholders the opportunity to benefit from the tremendous upside potential and long-term value creation driven by greater verticalization,” Intrator wrote, emphasizing CoreWeave’s position as Core Scientific’s primary customer, accounting for 76% of its revenue according to the company’s disclosures.
Strategic Importance Amid Rapid Expansion
Industry observers suggest the acquisition holds critical strategic importance for CoreWeave’s expansion in the competitive AI infrastructure market. The company has reportedly been racing to scale its computing power to meet intensifying demand from major technology partners, including OpenAI, Meta, Microsoft, and Nvidia. CoreWeave’s cloud computing services have positioned it at the forefront of data center industry developments.
According to company statements, CoreWeave plans to expand its operating data centers from approximately 470 megawatts to over 900 megawatts by the end of 2025. The Core Scientific acquisition would reportedly more than double that capacity while expanding the company’s pipeline of contracted future power by 50% to more than 3 gigawatts.
Financial Pressures and Cost Savings
The report states that acquiring Core Scientific would provide substantial cost savings for CoreWeave, which currently rents roughly 270 megawatts of data center space from the company. CoreWeave has indicated that owning Core Scientific would allow it to save approximately $10 billion in lease payments over the next 12 years, addressing one of its most significant operational expenses.
This cost reduction comes amid growing financial pressures for CoreWeave, with the company reporting that its debt had grown to $11.2 billion by the end of the second quarter, a 40% increase since the beginning of the year. Analysts suggest the company’s borrowing costs range from 7% to 15% across its various loans, while operating margins have reportedly fallen from 20% to 2% year-over-year.
Broader Industry Context and Future Prospects
The proposed merger occurs against the backdrop of CoreWeave’s remarkable growth trajectory since its March initial public offering, with the company achieving a $70 billion market capitalization—more than three times its post-IPO value. This expansion has been fueled by strategic acquisitions and partnerships across the technology sector, including recent related innovations in artificial intelligence development.
However, some analysts have raised concerns about the sustainability of CoreWeave’s business model amid its debt-fueled expansion. “They’re selling $20 bills for 15 bucks,” analyst Gil Luria commented, questioning whether the high-cost borrowing aligned with the company’s slimmer profit margins represents sound business strategy in the current market environment.
Meanwhile, opposing shareholders like Miller maintain that Core Scientific possesses significant standalone value, suggesting that “if you leave this company alone for 18 months, it’s a $30 to $40 company” per share in the current hot data center market. The outcome of the October 30 vote will determine whether CoreWeave’s vision for vertical integration prevails or whether shareholders will seek alternative paths to value creation amid evolving market trends in data infrastructure.
Additional context about the companies’ existing relationship can be found in their previous infrastructure agreements, while formal documentation is available through SEC filings. CoreWeave’s official announcement of the acquisition intent is detailed on their company website, and current institutional holdings can be reviewed through market data sources.
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