Shareholders Spurn All-Stock Merger, Back Core Scientific's AI Transition

Core Scientific (CORZ) shares climbed 5% on October 30 after shareholders voted down a proposed $9 billion all-stock merger with AI infrastructure firm CoreWeave (CRWV). The deal, which had faced mounting opposition from major investors and proxy advisors, was terminated following the unsuccessful vote, leaving CoreWeave's stock down nearly 6% in early trading, according to a CoinDesk report. The rejection marks a pivotal moment for Core Scientific, which has pivoted from bitcoin mining to AI infrastructure, as shareholders and analysts debate the company's standalone potential.

The merger, announced in July, would have exchanged each Core Scientific share for 0.1235 CoreWeave Class A shares, valuing the combined entity at $9 billion. However, critics argued the all-stock structure left Core Scientific shareholders exposed to CoreWeave's volatile stock price, with no downside protections, according to InvestorsObserver. Two Seas Capital, Core Scientific's largest active shareholder, led the opposition, calling the offer "underwhelming" and warning of risks tied to CoreWeave's equity. Proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis also recommended against the deal, citing undervaluation and governance concerns, CoinDesk reported.

Van Eck, now Core Scientific's 28th-largest shareholder, joined the backlash, criticizing the merger as a "golden parachute" for Core Scientific's executives and vowing to vote against the transaction, as previously reported by InvestorsObserver. Matthew Siegel, head of digital assets research at Van Eck, emphasized that Core Scientific could "lead the next phase of AI infrastructure" by focusing on standalone value creation rather than selling out, according to InvestorsObserver. CoreWeave CEO Michael Intrator defended the deal, calling it a "best and final offer" that provided "meaningful upside" for Core Scientific shareholders, in a Business Wire statement.

The failed merger underscores growing skepticism about all-stock transactions in the AI sector, where valuations are highly speculative. Analysts noted that Core Scientific's recent financial performance—including a 45% year-over-year increase in AI-related revenue—bolstered investor confidence in its independent trajectory, according to the company's Q3 report. Roth Capital Partners upgraded Core Scientific to "Buy" from "Neutral," citing the merger's collapse as an opportunity for the company to capitalize on its AI infrastructure pipeline without dilution, per Yahoo Finance.

CoreWeave, meanwhile, faces pressure to secure alternative data center capacity as demand for AI computing surges. The company, which counts OpenAI and Microsoft among its clients, has emphasized its need for energy-efficient infrastructure to support high-performance computing, according to Investor's Business Daily. Intrator stated CoreWeave would continue its commercial partnership with Core Scientific but acknowledged the merger's termination, CoinDesk reported.

The vote also highlights broader tensions in the corporate governance landscape. Proxy advisors and activist shareholders have increasingly influenced mergers, particularly in high-growth sectors where valuation disagreements are common. For Core Scientific, the rejection of the CoreWeave deal may signal a shift toward prioritizing shareholder alignment and operational flexibility as it transitions from bitcoin mining to AI-driven colocation services, according to a TradingView analysis.

With Core Scientific's stock up over 40% in 2025 and a $694 million liquidity buffer, analysts suggest the company is well-positioned to pursue independent growth, the TradingView piece noted. However, challenges remain, including converting facilities to AI workloads and managing debt amid rising interest rates. The outcome of the vote has reignited discussions about the strategic value of AI infrastructure, with Core Scientific's future success hinging on its ability to secure long-term clients and optimize its power resources.

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