Rumble’s $894M acquisition of Northern Data overshadowed by criminal probe
Northern Data (OTC:NDTAF) faces a criminal investigation for allegedly mislabeling GPU purchases. Meanwhile, a significant acquisition is on the horizon. Rumble (RUM) plans to buy Northern Data in an all-stock deal, potentially worth less than Northern Data's current market cap of around $894 million.
The investigation centers around Northern Data's alleged mislabeling of GPU purchases to claim tax incentives. This comes as the company prepares for a major acquisition by Rumble. The deal, expected to be announced soon, involves Northern Data selling its crypto-mining division, Peak Mining, for up to $200 million to a buyer linked to Tether.
The acquisition's terms have shifted. Initially, the exchange ratio was set at 2.319 to 1. However, this has been reduced, meaning Northern Data shareholders will own a smaller stake in the combined business. The potential joint valuation of the combined company has also dropped to approximately $2.9 billion, down from the initial $4.5 billion estimate. Tether's influence is evident, with the company holding a €575 million loan to Northern Data and planning to waive a significant portion of it, providing financial stability and aligning interests with the merger's success.
Northern Data's future is uncertain, with a criminal investigation underway and a significant acquisition pending. The deal, backed by Tether Holdings, involves a reduced exchange ratio and a lower combined company valuation. Both companies await the potential announcement of the acquisition in the coming days.
