Northern Data’s $2.9B Rumble Merger in Jeopardy Amid Criminal Probe
Northern Data (OTC:NDTAF), a German high-performance computing company, faces a criminal investigation by European prosecutors for allegedly mislabeling GPU purchases. Meanwhile, the company is in advanced talks with Rumble (RUM) for an all-stock acquisition, potentially valued below Northern Data's current market cap.
The investigation centres around Northern Data's Peak-Mining division, which was recently sold for up to $200 million to a buyer linked to Tether. The sale was aimed at bolstering Northern Data's liquidity. In a related development, Tether is set to waive a significant portion of a €575 million loan to Northern Data as part of the acquisition deal with Rumble.
The potential acquisition, expected to be announced in the coming days, involves Rumble's shares. Initially estimated at $4.5 billion, the combined company's potential joint valuation has since dropped to approximately $2.9 billion. Northern Data's largest shareholder is reportedly involved in the acquisition, with an upfront cash consideration of USD 50 million and deferred consideration pending further discussions with a global infrastructure asset management firm. However, Rumble is now considering a reduced exchange ratio, down from the initial 2.319-to-1 ratio, which would result in Northern Data shareholders owning a smaller stake in the combined business.
Northern Data's future is uncertain, with the company facing a criminal investigation and a potential acquisition by Rumble. Both companies are backed by Tether Holdings, with the deal potentially valuing Northern Data below its current market cap. The reduced exchange ratio and Tether's loan waiver suggest a complex and evolving situation.
