TLDRs;
- Core Scientific shares jump 6% after ISS flags undervalued takeover bid from CoreWeave.
- Two Seas Capital opposes deal citing valuation, structure, and executive awards concerns.
- CoreWeave’s recent AI launches boost investor sentiment amid acquisition plan.
- Stock trades above proposed bid, reflecting market optimism and uncertainty over shareholder vote.
Core Scientific Inc. shares surged 6% to $20.00 in late trading Monday, before a further 1.72% Tuesday as investor optimism followed the latest commentary from proxy adviser Institutional Shareholder Services (ISS) questioning the valuation of a pending takeover bid by CoreWeave Inc.
The proposed acquisition, announced in July, values Core Scientific at $20.40 per share. However, ISS highlighted concerns that the board of Core Scientific may not have fully explored alternative offers, including potential bids from financial buyers, sparking fresh debate among shareholders.
Proxy Flags Deal Weakness
ISS criticized the CoreWeave offer as undervalued and structurally risky. The advisory noted that the deal lacks a collar mechanism, a key feature that would protect shareholders from swings in the acquirer’s stock, and includes a “no-shop” provision that prevents Core Scientific from seeking competing bids.
Additionally, there is no cash component, and breakup fees could penalize the company if it walks away from the agreement.
The advisory’s warning follows a sharp drop in implied value after the bid announcement, falling over 40% from $20.40 to $11.41 per share. Investors are now weighing the potential risks of accepting the current terms versus maintaining independence.
Shareholder Opposition Rises
Two Seas Capital LP, a significant Core Scientific shareholder, has already announced plans to vote against the CoreWeave deal. The firm cited concerns over the offer’s valuation, structure, and management incentives, including nearly $200 million in immediately vesting equity awards for executives at closing, which could influence board support.
If shareholders reject the offer, Core Scientific would remain independent without incurring a termination fee. A potential third-party acquisition could trigger a $270 million fee, but only if it meets specific conditions and closes within 12 months.
CoreWeave’s Recent Moves
The deal comes amid CoreWeave’s aggressive expansion in the AI cloud space. Earlier this month, CoreWeave shares jumped 8.7% after launching new tools that help developers build and monitor AI agents more efficiently. The company also introduced a serverless reinforcement learning service that reduces training costs by approximately 40% compared to local Nvidia H100 GPU setups.
This follows CoreWeave’s $1 billion acquisition of Weights and Biases in May and its broader strategy to compete with cloud giants like Amazon Web Services, serving major clients including OpenAI and Meta. The company’s planned $9 billion acquisition of Core Scientific is part of this push, but some shareholders remain skeptical.
Implications for Investors
The surge in Core Scientific’s stock reflects both the market’s reaction to ISS’s critique and broader uncertainty surrounding the deal. While CoreWeave continues to innovate in AI infrastructure, investors are focused on governance, deal fairness, and potential risks linked to management incentives and structural weaknesses.
The next steps hinge on shareholder votes and whether Core Scientific’s board actively pursues alternative offers. Until then, the stock continues to trade above the bid price, signaling cautious optimism and continued scrutiny from institutional advisers.
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