Key Takeaways:
- Two Seas Capital opposes CoreWeave’s proposed acquisition of Core Scientific, citing valuation and deal structure concerns.
- The deal’s all-stock nature raises broader questions about shareholder protections amid volatile AI infrastructure valuations.
- Institutional investor resistance may indicate shifting expectations for governance and transparency in high-growth infrastructure sectors.
Two Seas Capital, which holds a 6.3% stake in the Bitcoin miner Core Scientific, said it will vote against the company’s proposed acquisition by CoreWeave, according to an open letter published by the firm.
The letter, addressed to fellow shareholders, argues that the all-stock deal undervalues Core Scientific and leaves investors vulnerable to price fluctuations in CoreWeave’s shares.
Objection Raised by Two Seas Capital
The firm described the transaction structure as “deficient” and said it believes the deal unfairly favors CoreWeave at the expense of Core Scientific shareholders.
“We are not philosophically opposed to a merger of these two parties,” wrote Sina Toussi, founder and CIO of Two Seas Capital.
“We are also investors in CoreWeave, believe in its strategy, and respect its management team. Moreover, we have advocated for this combination as we clearly recognize the strategic merits,” said Toussi.
Two Seas said it supports Core Scientific’s long-term strategy as an operator of high-performance computing infrastructure and expressed confidence in the company’s ability to grow independently. It cited rising demand for computing power driven by AI applications as a key factor in its decision.
While Two Seas also holds an investment in CoreWeave and acknowledges the strategic rationale behind a merger, it called on Core Scientific’s board to secure terms that encapsulate the company’s full value, including potential synergies.
Alleged Undervaluation of Core Scientific
The letter said Two Seas plans to solicit other shareholders to vote against the current terms unless revisions are made.
“We believe the Company’s most promising days lie ahead,” the letter said. “In our view, there is no compelling reason to sell Core Scientific at an underwhelming valuation with a deficient structure.”
Some institutional investors are questioning all-stock mergers involving infrastructure firms tied to AI, especially when deal structures expose shareholders to post-closing price swings. These concerns often focus on whether equity-only transactions provide sufficient protection or value in volatile markets.
The Core Scientific case also points to ongoing debate around how much future demand for compute infrastructure should factor into deal pricing. As competition increases and asset valuations shift, shareholder votes may become a more active checkpoint in determining the direction of consolidation in this sector.
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