Investors Block $9 Billion Merger Citing Concerns About Valuation and Strategy

On October 30, Core Scientific Inc. shareholders voted against a proposed $9 billion merger with

Inc., effectively halting the all-stock transaction that had drawn increasing resistance from key investors and proxy advisory firms. The proposal did not achieve the necessary approval, reflecting heightened doubts about the deal’s valuation and the long-term strategic fit between the two companies, both of which operate in the AI and data center sectors, according to a .

This outcome followed public opposition from major shareholders such as Van Eck and Two Seas Capital. Matthew Siegel, who leads digital assets research at Van Eck, stated that

would be better positioned to leverage its AI infrastructure independently rather than accepting what he described as an undervalued offer. As the 28th-largest shareholder, Van Eck also criticized the executive compensation package tied to the deal, arguing it did not align with shareholder interests, as reported by . Two Seas Capital, the first significant investor to voice opposition, had previously cautioned that the all-stock nature of the deal would leave Core Scientific shareholders exposed to CoreWeave’s stock volatility without adequate safeguards.

Proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis added to the opposition by advising shareholders to vote against the merger, citing concerns over valuation and risks associated with Core Scientific’s independent strategy. While both firms acknowledged the strategic rationale of combining CoreWeave’s AI cloud capabilities with Core Scientific’s data center assets, they pointed out that Core Scientific’s current share price likely did not reflect its standalone value, according to a

. Glass Lewis also observed that no other potential buyers had come forward since CoreWeave’s initial proposal in June 2024, making it difficult to anticipate a revised offer.

Michael Intrator, CEO of CoreWeave, defended the proposal as the “best and final” offer, arguing that it would reduce the risks associated with Core Scientific’s solo strategy, which faces high capital requirements and operational challenges. He emphasized the benefits of access to CoreWeave’s capital and the “favorable exchange ratio” approved by Core Scientific’s board. However, analysts from Roth Capital Partners and Jefferies expressed skepticism about the possibility of a new offer, pointing to CoreWeave’s unwillingness to renegotiate and the fact that Core Scientific’s shares were trading 18% above the implied offer price, as noted in a

and a .

With the merger now off the table, attention has shifted to Core Scientific’s prospects as a standalone company. Jefferies analysts raised their price target from $22 to $24, citing the company’s 305 MW of billable capacity and its potential to attract large-scale tenants or convert to a REIT model. Roth Capital upgraded Core Scientific to a “Buy” rating, forecasting long-term growth through colocation leasing and power expansion. Meanwhile, CoreWeave’s stock has remained stable, with institutional investors buying more shares than insiders have sold, and analysts maintaining a “Moderate Buy” outlook.

Now that the merger has been rejected, Core Scientific faces an uncertain future. Management has highlighted its shift toward AI infrastructure and

mining, but the failed deal underscores the complexities of balancing shareholder interests in a fast-changing industry. CoreWeave, on the other hand, may need to rethink its acquisition strategy as it competes in the evolving AI infrastructure market.