CoreWeave CEO Addresses Core Scientific Deal Amid Shareholder Concerns

CoreWeave CEO Michael Intrator told CNBC on Tuesday that the company’s proposed acquisition of Core Scientific, the Bitcoin mining and data center firm, is viewed as a strategic “nice to have” rather than a critical necessity, particularly in light of potential shareholder opposition to the deal.

In July, CoreWeave, amid a surge in demand for AI computing power, proposed an all-stock deal to acquire Core Scientific, initially valued at approximately $9 billion. The immediate market reaction saw Core Scientific’s stock price dip nearly 18%, reflecting investor uncertainty regarding the terms.

The proposed acquisition has faced headwinds, most notably from Institutional Shareholder Services (ISS), a leading proxy advisor, which recommended that shareholders vote against the deal. ISS cited concerns that Core Scientific’s intrinsic valuation, as suggested by its rising share price post-announcement, may exceed CoreWeave’s offer. This suggests that some investors believe the market is placing a higher premium on Core Scientific’s future prospects, potentially driven by factors such as Bitcoin’s price volatility, expansion into AI infrastructure, or potential lucrative partnerships.

Intrator expressed disappointment with the ISS report, reiterating his belief that the acquisition is “in the long-term interest of Core Scientific shareholders.” He clarified, however, that CoreWeave will not be increasing the offer price.

“We think that the bid that we put out there for [Core Scientific] is a fair representation of the relative value of the two companies as an all stock deal,” Intrator stated. “We are going to just kind of proceed as we have, in the event that the transaction does not go through. It is a nice to have, not a need to have for us.”

He further emphasized CoreWeave’s disciplined approach. “Everything has a value, and the number we put out is the value we’re willing to pay for them under all circumstances,” Intrator added, underscoring the company’s unwillingness to overpay, even amidst the competitive landscape of AI infrastructure providers.

Earlier this month, Two Seas Capital, a significant Core Scientific shareholder, publicly voiced dissent, arguing that CoreWeave’s offer undervalues the company. Shareholders are scheduled to vote on the proposed acquisition on October 30.

“We see no reason why Core Scientific shareholders should accept such an underwhelming deal. Based on recent trading data, we see little evidence that they will,” Two Seas Capital stated in a letter to shareholders, highlighting the growing resistance to the acquisition.

CoreWeave, backed by substantial NVIDIA GPU resources, has been strategically expanding its capabilities through acquisitions of AI-related firms such as OpenPipe, Weights & Biases, and Monolith. These acquisitions signal CoreWeave’s intent to diversify its service offerings and solidify its position beyond purely providing raw GPU compute power. This integrated approach enhances its value proposition to AI developers and enterprises seeking comprehensive infrastructure solutions.

CoreWeave’s success is intrinsically linked to the booming demand for AI and machine learning. By providing NVIDIA-powered computing power to hyperscalers like Microsoft and other key players, CoreWeave has capitalized on the wave of artificial intelligence investments. The company’s ability to secure significant funding and rapidly deploy cutting-edge infrastructure has been crucial to its rapid growth.

“We’ve been in acquisitive mode as we continue to build and extend the functionality of our company,” Intrator concluded, signaling CoreWeave’s continued commitment to strategic expansion and innovation in the AI infrastructure domain. The outcome of the Core Scientific vote will be a telling indicator of CoreWeave’s influence and ability to navigate the complexities of the market.