CoreWeave’s Deal for Core Scientific May Be in Trouble

Michael Intrator, co-founder and chief executive officer of CoreWeave, shown at a conference in London on Tuesday. (Chris J. Ratcliffe/Bloomberg)

Key Points

• Institutional Shareholder Services and major shareholders oppose CoreWeave’s acquisition of Core Scientific, citing a flawed process and inadequate valuation.
• The all-stock deal offers no price protection, causing Core Scientific shareholders to worry about receiving less than the initial $20.40 per share valuation.
• Core Scientific’s stock increased 5.5% since the merger announcement, significantly underperforming competitors who averaged a 150% share-price increase.

On the surface, the proposed acquisition of Core Scientific by CoreWeave makes a lot of sense as a simple vertical integration—a company buying a supplier. But the proxy advisory firm Institutional Shareholder Services, is advising against the merger and a few large Core Scientific shareholders are trying to lead the charge to reject the deal.

The market seems to think they will be successful. So does ISS. The “CORZ share price since announcement has sent a clear signal that the market believes the company’s value is greater than the offer,” it said in its report.

CoreWeave is a “neocloud” company that specializes in renting out servers for artificial intelligence in the cloud. Core Scientific, formerly a cryptocurrency miner, leases data-center space, power, and facility management to CoreWeave in long-term contracts.

With less than two weeks to go before an Oct. 30 vote on the deal, Two Seas Capital, one of the largest shareholders outside of index funds, filed a definitive proxy statement opposing the merger. Two Seas invested in the company because it thought it could create value for shareholders, it said.

“We are therefore disappointed that the Core Scientific Board has decided to sell the Company following what we regard as a flawed process, at a valuation we believe is inadequate, and in a transaction that – as demonstrated by the significant decline in the implied value of the Merger post-announcement – was poorly structured,” the proxy reads.

“We see no reason why any investor would support such a transaction.”

Two other large shareholders who spoke to Barron’s also vowed to vote “no,” and a third, Gullane Capital, has publicly declared its opposition.

Core Scientific shareholders’ complaints begin with the terms of the all-stock deal, which were unusual. The proposal is a simple stock swap, with 0.1235 CoreWeave shares to be distributed for each Core Scientific share. But it offers no price protection for either company’s shareholders, as is typical in these cases.

This is particularly notable when it comes to CoreWeave, one of the most volatile stocks. In the 141 days it has traded since its initial public offering, 65% brought price moves of more than 3%. The deal valued Core Scientific shares at $20.40 apiece when it was announced in July, but that was $15.69 at the close of trading on Monday.

Core Scientific shareholders worry that they won’t get $20.40 per share when the deal closes, and may receive substantially less.

Core Scientific shareholders are also chafing at what they perceive to be a missed rally in the stock. Many other crypto miners are pivoting into hosting AI data centers. Ten of those competitors averaged a share-price increase of 150% since the merger was announced, with the worst performer up 17%. Core Scientific stock was up 5.5% in that time.

Created with Highcharts 9.0.1Left BehindCore Scientific stock has been outpaced by shares of its competitors.Source: Factset

Created with Highcharts 9.0.1Core ScientificAverage of 10 competitorsJuly 2025Oct.-50-250255075100125150175200%

The market seems to be pricing in a “no” vote at the end of the month. Typically, after the announcement of a merger, the acquired company’s stock trades at a small discount to the deal price. Since mid-August, Core Scientific stock has been trading at a significant premium.

In early October, CoreWeave CEO Michael Intrator went on Bloomberg TV and tried to beat back the revolt. He said that “under no circumstances will we readdress the bid that we put out,” and the premium dropped from 7% to 1%. But it began rising soon thereafter.

Intrator tried again to tamp down the “no” votes, describing the deal as CoreWeave’s “best and final” offer in an Oct. 16 letter to Core Scientific shareholders. Still, the spread between the Core Scientific share price and the implied deal price continued to widen.

Created with Highcharts 9.0.1Core Scientific stock’s premium to implied deal price for acquisition by CoreWeave.Source: Factset

Created with Highcharts 9.0.1July 2025Oct.-40-30-20-100102030%

At the close of trading on Monday, the premium was 20%, rising sharply from Friday. After hours, with the ISS recommendation released, it grew further.

Intrator is persisting. At a London conference on Tuesday, he said, “We’re very comfortable that the way that we have priced it is appropriate for us.”

Investors are bidding up Core Scientific stock, widening the spread, because they believe that the deal won’t go through, and that Core Scientific stock will rally in response. A second possibility is that another company could come in and outbid CoreWeave.

Meanwhile, if CoreWeave still wants to see a deal, the pressure is mounting. Should the merger fail, Core Scientific shareholders will have all the leverage to set terms for a new deal.

Write to Adam Levine at adam.levine@barrons.com