CoreWeave’s $5 Billion Core Scientific Acquisition Faces Mounting Shareholder Opposition

CoreWeave's $5 Billion Core Scientific Acquisition Faces Mounting Shareholder Opposition - Professional coverage

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Major Shareholder Joins Opposition to CoreWeave’s Acquisition Plan

A $5 billion merger crucial to CoreWeave‘s expansion in the artificial intelligence sector faces increasing uncertainty as another major investor has announced opposition to the deal. According to reports, Trip Miller, founder of Gullane Capital and the third-largest shareholder in Core Scientific, stated he would vote against the proposed acquisition by rival data center firm CoreWeave.

“Under the math of the deal today, I would have to vote no,” Miller told Business Insider, adding that the transaction would value his shares at a discount to current market prices. Gullane Capital owns a stake in Core Scientific worth approximately $200 million, making it the third-largest shareholder behind investment giants Vanguard and BlackRock.

Deal Economics Shift Amid Stock Price Movements

The acquisition, initially valued at roughly $9 billion when announced in July, has seen its economics shift significantly in recent months. Sources indicate the original offer represented a 66% per-share premium over Core Scientific’s trading price at the time, but CoreWeave’s stock decline and Core Scientific’s price increase have altered the valuation.

Analysts suggest the stock conversion deal now values Core Scientific shares at around $17—more than 10% below Friday’s market price of approximately $19. This fluctuation has exacerbated investor concerns that the transaction sharply undervalues Core Scientific just weeks before the scheduled October 30 shareholder vote.

Growing Investor Resistance

Miller’s opposition follows similar concerns raised by Two Seas Capital, another investment firm owning approximately 6.3% of Core Scientific’s stock. According to their published presentation, the firm outlined numerous objections to the takeover, including insufficient profitability for stockholders and lack of protection from stock fluctuations that have disrupted the deal’s 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 their analysis. They characterized the current valuation as a “take-under” of Core Scientific and urged investors to reject the transaction.

CoreWeave’s Strategic Imperative

For CoreWeave, the acquisition represents a critical component of its aggressive expansion strategy in the competitive cloud computing and AI infrastructure market. The company has positioned itself at the forefront of artificial intelligence infrastructure, announcing significant partnerships with industry leaders including OpenAI, Meta, Microsoft, and Nvidia.

According to the report, acquiring Core Scientific would streamline CoreWeave’s mounting overhead by allowing ownership of data center infrastructure it currently leases. CoreWeave reportedly rents approximately 270 megawatts of data center space from Core Scientific, and ownership could save an estimated $10 billion in lease payments over the next 12 years.

CEO’s Defense and Growth Trajectory

Michael Intrator, CoreWeave’s Chief Executive Officer, has vigorously defended the acquisition as “the most compelling path forward for Core Scientific stockholders.” In a response letter, Intrator characterized Two Seas Capital’s complaints as “misleading and misinformed” and stated the current offer represents CoreWeave’s “best and final” proposal.

The CEO emphasized that CoreWeave represents Core Scientific’s only meaningful data center customer, accounting for 76% of Core Scientific’s revenue. Intrator warned investors to “think objectively about Core Scientific’s stand-alone prospects and the significant risks involved” in rejecting the deal.

Broader Industry Context

CoreWeave’s rapid, debt-fueled growth has positioned the company at the center of debates about whether AI infrastructure investments represent sustainable growth or speculative excess. Since its March initial public offering, CoreWeave has achieved a $70 billion market capitalization—more than triple its post-IPO value—while pursuing aggressive expansion through acquisitions and partnerships.

The company’s acquisition strategy includes several strategic purchases and technology expansions designed to broaden its capabilities. Most recently, the company completed another significant acquisition as part of its broader growth initiative.

Financial Considerations and Market Position

Despite reporting $1.2 billion in second-quarter revenue—more than double the same period last year—CoreWeave’s operating margins reportedly fell from 20% to 2% year-over-year. The company’s debt reportedly grew to $11.2 billion by the end of the second quarter, a 40% increase from the beginning of the year, with borrowing costs ranging from 7% to 15% on various loans.

Analysts following market trends have raised concerns about the company’s high-cost borrowing relative to its slimmer profit margins. One analyst reportedly questioned whether the business model was sustainable, comparing it to “selling $20 bills for 15 bucks.”

Strategic Importance of Data Center Ownership

Industry experts suggest the Core Scientific acquisition is crucial for CoreWeave’s long-term viability. Raul Martynek, CEO of DataBank, noted that CoreWeave “realize[s] how important this is to the long-term viability of their business model, owning the economics around their largest cost, which is data centers.”

The acquisition would reportedly more than double CoreWeave’s operational megawattage and expand its pipeline of contracted future power by 50% to more than 3 gigawatts. This expansion aligns with the company’s previously announced infrastructure development plans and broader strategic objectives in the competitive AI infrastructure space.

Shareholder Perspectives and Alternative Scenarios

Opposing shareholders have presented contrasting visions for Core Scientific’s future. Miller of Gullane Capital suggested that in the current hot data center market, Core Scientific could reach $30 to $40 per share if left independent for 18 months, potentially becoming a more lucrative acquisition target.

As the October 30 vote approaches, investors are weighing CoreWeave’s official proposal documentation against alternative scenarios for maximizing value. The outcome will significantly impact both companies’ trajectories in the rapidly evolving AI infrastructure landscape and could influence broader industry developments and related innovations in data center operations.

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