Major Shareholder Opposition Threatens Core Scientific Acquisition
The proposed $5 billion acquisition of Core Scientific by AI infrastructure giant CoreWeave faces mounting investor resistance as key shareholders announce their opposition to the deal. Trip Miller, founder of Gullane Capital and Core Scientific’s third-largest shareholder, has publicly stated he will vote against the transaction, joining growing dissent from other major investors.
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“Under the math of the deal today, I would have to vote no,” Miller told Business Insider, highlighting how shifting stock valuations have undermined the acquisition’s appeal. Gullane Capital holds approximately $200 million in Core Scientific stock, making its opposition particularly significant as the October 30 shareholder vote approaches.
Deal Economics Shift as Stock Values Change
When initially announced in July, the stock conversion deal valued Core Scientific at approximately $9 billion with a $20.40 per share offer—representing a 66% premium over the company’s trading price at the time. However, market dynamics have substantially altered the transaction’s value proposition.
CoreWeave’s stock decline combined with Core Scientific’s share price increase has reduced the current offer to approximately $17 per share, more than 10% below Core Scientific’s Friday closing price of $19. This valuation shift has triggered concerns that the deal now substantially undervalues the data center operator.
The changing valuation landscape reflects broader market trends affecting technology infrastructure companies as demand for computing resources evolves.
Investor Concerns Mount Over Deal Structure
Miller’s opposition follows similar concerns raised by Two Seas Capital, another significant shareholder controlling approximately 6.3% of Core Scientific stock. The investment firm published a detailed presentation outlining multiple objections, including inadequate profitability for shareholders and insufficient protection against stock price fluctuations.
“This is not a popular deal, I think for one simple reason: it’s a flawed structure,” Miller stated. “It would be a deal that would value my shares, actually, at a discount to what they currently trade for today.”
The investor skepticism comes amid significant industry developments affecting infrastructure providers and their financial models.
CoreWeave’s Strategic Imperative
For CoreWeave, the acquisition represents a critical component of its aggressive expansion strategy. The AI cloud specialist has experienced explosive growth since its March IPO, achieving a $70 billion market capitalization—more than triple its post-IPO valuation.
The company has secured landmark agreements with AI industry leaders including OpenAI, Meta, Microsoft, and Nvidia, while simultaneously spending billions to acquire AI developers and cloud providers. CoreWeave currently rents approximately 270 megawatts of data center capacity from Core Scientific, and owning the company would potentially save $10 billion in lease payments over the next 12 years.
CoreWeave’s expansion plans include growing its operational data centers from 470 megawatts to over 900 megawatts by the end of 2025. The Core Scientific acquisition would more than double that capacity while expanding the company’s contracted future power pipeline by 50% to exceed 3 gigawatts.
These ambitious plans align with broader related innovations in computing infrastructure and resource management.
Financial Pressures and Growth Challenges
CoreWeave’s second-quarter financial results reveal the tension between rapid expansion and profitability. While revenue reached $1.2 billion—more than double the same period last year—and the company reported a $30.1 billion revenue backlog, operating margins collapsed from 20% to 2% year-over-year.
Meanwhile, CoreWeave’s debt burden grew to $11.2 billion by the end of the second quarter, a 40% increase since the beginning of the year. The company faces borrowing costs ranging from 7% to 15% across its various loans, creating significant financial pressure as profit margins narrow.
Analyst Gil Luria expressed concern about the sustainability of this model, noting “They’re selling $20 bills for 15 bucks.” He questioned whether the business model itself was viable given the high-cost borrowing relative to slimmer profit margins.
These financial challenges occur alongside recent technology advancements that are reshaping authentication and security infrastructure.
Leadership’s Conflicting Perspectives
CoreWeave CEO Michael Intrator has mounted a vigorous defense of the acquisition, describing it as “the most compelling path forward for Core Scientific stockholders” and declaring the current offer CoreWeave’s “best and final” proposal.
In a October 16 letter, Intrator emphasized that the combination would create “tremendous upside potential and long-term value creation driven by greater verticalization.” He dismissed Two Seas Capital’s criticisms as “misleading and misinformed” while highlighting that CoreWeave accounts for 76% of Core Scientific’s revenue.
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Intrator warned Core Scientific investors to “think objectively about Core Scientific’s stand-alone prospects and the significant risks involved” in rejecting the deal and remaining independent.
This leadership perspective reflects how creative leadership approaches are evolving in response to complex merger environments.
Industry Context and Future Implications
The acquisition struggle occurs against the backdrop of intense competition in the AI infrastructure sector. CoreWeave’s debt-fueled expansion has positioned it at the center of debates about whether AI represents a sustainable investment opportunity or a speculative bubble.
Data center industry executives recognize the strategic importance of the transaction. Raul Martynek, CEO of DataBank, noted that CoreWeave “realize[s] how important this is to the long-term viability of their business model, owning the economics around their largest cost, which is data centers.”
Miller and other opposing shareholders counter that Core Scientific’s standalone value could reach $30-40 per share within 18 months given the strong data center market, potentially making it a more lucrative acquisition target for other suitors.
The ongoing situation demonstrates how market trends in AI funding are influencing consolidation activities across the technology sector.
For comprehensive coverage of this developing story, readers can follow the latest updates on the CoreWeave-Core Scientific acquisition negotiations as the October 30 shareholder vote approaches.
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