Two Seas Capital, the largest shareholder in Core Scientific, has formally written a letter opposing the company’s proposed $9 billion all-stock sale to CoreWeave. The investor, which holds approximately 6% of Core Scientific, deems the offer undervalued and argues it exposes shareholders to undue risk. While not outright rejecting a merger, Two Seas insists on improved deal terms.
Letter condemns deal as undervaluing and risky
Two Seas wants a “collar” agreement, which will protect it against CoreWeave’s fluctuating stock price. Ever since the agreement, the stock has dropped significantly, reducing the implied valuation from $9 billion to around $6.7 billion.
Without a revamped proposal, the deal may falter ahead of a shareholder vote expected later this year. Failure of the merger could leave CoreWeave scrambling to reduce its $10 billion lease expense, while Core Scientific would remain an independent infrastructure provider, potentially vulnerable to market volatility or reduced investor confidence.
Positive share price uptick after opposition
Since the letter came to public knowledge, Core Scientific’s shares popped about 3% to $14.38, while CoreWeave’s stock rose intraday by nearly 9%. Earlier, the mere resurgence of acquisition talks in June had propelled Core Scientific’s stock to surge over 23 % in a single day before retracing.
Such shareholder resistance is not unprecedented. In the UK, Anglo American turned down a £31 billion unsolicited bid from BHP, with major investors calling it opportunistic and undervalued. In another case, hedge fund-backed investors in Third Point’s reverse takeover structure triggered rebellion over governance concerns and discounted exit terms.
Two Seas Capital’s decisive pushback casts significant doubt over the future of the $9 billion all-stock merger between CoreWeave and Core Scientific. CoreWeave now faces pressure to sweeten the terms, perhaps through a valuation bump or value-preserving mechanisms like collars, or risk losing out entirely.