Shareholders of Core Scientific (CORZ) have decisively rejected a proposed $9 billion all-stock merger with AI infrastructure firm CoreWeave. The vote brings an abrupt end to what would have been a landmark deal in the rapidly expanding AI data center industry.
Following the shareholder decision, Core Scientific formally terminated the merger agreement. The market reacted immediately, with Core Scientific's stock climbing 4.5%, while CoreWeave saw its shares decline by 5% in the session.
Key Takeaways
- Core Scientific shareholders voted against a $9 billion all-stock merger offer from CoreWeave.
- Investors cited concerns that the deal undervalued Core Scientific's long-term potential.
- The volatility of CoreWeave's stock and a lack of downside protection were also key factors in the rejection.
- Following the vote, Core Scientific's stock rose 4.5%, while CoreWeave's stock fell 5%.
Shareholders Halt Landmark AI Infrastructure Deal
The proposed merger between Core Scientific and CoreWeave has been officially called off. The decision came after a swift shareholder vote that went against the acquisition, forcing Core Scientific's board to terminate the agreement.
The deal, valued at approximately $9 billion, was structured as an all-stock transaction. It was closely watched by industry analysts as a major consolidation play in the high-demand sector of AI-focused data centers.
The market's response to the collapsed deal was telling. Investors appeared to reward Core Scientific for rejecting the offer, sending its stock (CORZ) up by 4.5%. Conversely, CoreWeave (CRWV), the aspiring acquirer, experienced a 5% drop in its share price, reflecting disappointment over the failed expansion attempt.
Concerns Over Valuation and Volatility Drove the 'No' Vote
The rejection was not a surprise to those following the deal closely. The decision was heavily influenced by recommendations from prominent proxy advisory firms, which often guide institutional investors' voting decisions.
A significant number of Core Scientific shareholders, including at least one major investor, publicly voiced opposition to the terms. The primary argument was that the $9 billion offer significantly undervalued the company's future prospects in the booming AI market. Investors are betting that Core Scientific can generate more value as a standalone entity.
Deal by the Numbers
- Proposed Value: $9 billion (all-stock)
- Core Scientific (CORZ) Stock Move: +4.5%
- CoreWeave (CRWV) Stock Move: -5.0%
- CoreWeave's Potential Savings: ~$10 billion in future leasing costs
Another major sticking point was the nature of the all-stock offer. Shareholders expressed concern over the lack of protection against the volatility of CoreWeave's stock. Without a cash component or a collar mechanism to protect against price swings, the deal was seen as too risky for Core Scientific's investors.
"Accepting an all-stock offer from a volatile peer without adequate safeguards would have been a gamble on their performance, not a realization of our own company's intrinsic value," noted one analyst familiar with shareholder sentiment.
Strategic Setbacks and Future Paths
For CoreWeave, the failed merger is a significant strategic setback. The company had aimed to acquire Core Scientific's extensive data center capacity to support its aggressive growth plans in the AI cloud computing space.
The acquisition was projected to save CoreWeave an estimated $10 billion in future leasing costs, a critical factor for maintaining competitive pricing in the infrastructure market. Now, the company must seek alternative, likely more expensive, avenues to secure the necessary capacity to meet soaring demand from AI developers.
The AI Data Center Gold Rush
The backdrop to this failed merger is the explosive growth in demand for specialized data centers capable of handling artificial intelligence workloads. Companies like CoreWeave provide the essential infrastructure for training and deploying large language models. Access to physical data center space and power is a primary bottleneck in the industry, making companies with existing facilities like Core Scientific highly valuable assets.
For Core Scientific, the path forward is now one of independence. By rejecting the offer, its shareholders have placed a bet on the company's management and its strategic position in the market. The pressure is now on Core Scientific to deliver on the long-term potential that its investors believe it holds, potentially seeking more favorable partnerships or focusing on organic growth to capitalize on the AI boom.
The outcome of this shareholder vote sends a clear message across the industry: while consolidation is expected, valuations will be heavily scrutinized. Asset holders in the AI infrastructure space are increasingly aware of their leverage and are unwilling to sell short on future growth.
