#United States #New York #CoreWeave #Two Seas Capital #Core Scientific

Proxy Advisory Firms Recommend Against Proposed Merger

The independent proxy advisory landscape has recently become a focal point of attention, especially regarding the merger proposal between Core Scientific, Inc. and CoreWeave, Inc. Recently, two leading firms, Glass Lewis and Institutional Shareholder Services (ISS), publicly advised shareholders of Core Scientific to vote "AGAINST" the proposed sale on the upcoming GOLD proxy card. This recommendation comes ahead of an important special meeting scheduled for October 30, 2025, where shareholders will deliberate on the merits of the acquisition.

Two Seas Capital LP, one of Core Scientific’s significant shareholders, expressed satisfaction over the advisory firms' stance, reinforcing their position that the proposed merger to CoreWeave is not in the shareholders' best interest. According to a report by Glass Lewis, the deal's proposed value does not effectively mitigate the considerable risks faced by Core Scientific's shareholders. Specifically, the advisory firm pointed out that the deal's structure lacks price protection measures, which are crucial given the volatility in CoreWeave’s stock performance. Thus, it suggests that maintaining independence could be more beneficial for Core Scientific.

Concerns Highlighted by Advisory Firms

In the advisory report, Glass Lewis raised several critical points regarding the inadequacy of the merger's valuation and structure. They highlighted significant concerns about how risks and values were allocated during negotiations. For instance, the board of Core Scientific did not insist on price protection mechanisms for its shareholders despite evident stock market volatility of CoreWeave's shares. These observations resonate with concerns raised by Two Seas regarding the overall financial wisdom of the merger.

Inadequate Valuation

The advisory firms scrutinized the financial evaluations of CoreWeave, indicating that the projected growth and earnings trajectory may have been overly optimistic. Two Seas challenged appraisers’ methodologies, particularly criticizing the lack of terminal values assigned to the colocation contracted business—implying that the advisors might be underestimating the long-term contributions and stability that those assets could offer. According to their calculations, the merger consideration's implied value now sits significantly lower than what shareholders might expect, further questioning whether the proposal is justifiable.

Promising Standalone Potential

Despite the merger proposition, Core Scientific remains an attractive standalone entity in the booming AI landscape. Two Seas argues vehemently that the firm has considerable potential to thrive independently. The firm’s prospects, they claim, have become increasingly valuable as the demand for AI and high-performance computing infrastructure accelerates. A comparison of Core Scientific's current share value with the implied value of the merger consistently reflects a negative spread, indicating that shareholders assign higher value to the company as an independent entity than under the proposed merger terms. This consistent trend suggests repeated skepticism regarding the fairness and strategic wisdom of the merger plan.

Looking Forward

As the special meeting looms, shareholders are urged by Two Seas, Glass Lewis, and ISS to reconsider the merger terms critically and align their votes against the proposed acquisition. The collective message is clear: The risks of such a merger may overshadow any potential benefits, and maintaining independence might unlock greater value in the long run. Hence, shareholders are advised to consult the forthcoming proxy materials and be proactive in asserting their interests by casting their votes against the merger on the GOLD proxy card.

The upcoming shareholder meeting is poised to determine Core Scientific's future. As investors weigh in, the call for caution and consideration underlines a significant moment in the company’s trajectory. Will the shareholders align with the advisory firms and preserve the company’s independence, or will they heed the proposed merger's ambiguous promises? The answer lies just a few weeks ahead as the voting decision approaches.