Two Seas Capital Challenges Proposed Sale of Core Scientific

Two Seas Capital's Opposition to Core Scientific's Sale

Two Seas Capital LP, the largest active shareholder of Core Scientific, Inc. (NASDAQ: CORZ), has recently announced its decision to oppose the proposed sale of Core Scientific to CoreWeave, Inc. (NASDAQ: CRWV). This decision illustrates Two Seas' commitment to actively engaging with fellow shareholders and advocating for their best interests.

Concerns Over Valuation and Economic Risk

In an open letter addressed to fellow shareholders, Two Seas articulated its belief that the proposed sale significantly undervalues Core Scientific, presenting the shareholders with potential economic risks that could arise from the deal. Two Seas believes that the current offer does not reflect the true value of Core Scientific's pioneering advancements in high-performance computing (HPC) infrastructure and its position in the rapidly evolving landscape of artificial intelligence (AI).

The Value of Core Scientific

Since its investment in Core Scientific in 2022, Two Seas has significantly increased its equity stake in the company, now holding over 19 million shares. This commitment stems from Two Seas' confidence in Core Scientific's capacity for long-term growth and success within the AI sector. The demand for AI and computing infrastructure is growing exponentially, and Two Seas sees Core Scientific as exceptionally well-positioned to capitalize on this trend.

Risks of the Proposed Sale

The proposed all-stock sale to CoreWeave includes an uncollared structure, leaving Core Scientific shareholders vulnerable to fluctuations in CoreWeave's stock price. This arrangement raises concerns about the long-term value that shareholders might receive, as they may find themselves subjected to significant volatility without proper safeguards.

Advocacy for Independent Growth

While Two Seas acknowledges the potential strategic benefits of merging with CoreWeave, they emphasize their belief that the sale undervalues Core Scientific and favors CoreWeave financially. Two Seas is open to future negotiations but insists that any deal must prioritize the fairness and equity of Core Scientific's valuation, taking into account the anticipated growth and strategic assets of the firm.

Engagement with Shareholders

Moving forward, Two Seas Capital intends to actively solicit other shareholders to join in opposing the transaction as it is currently presented. They are committed to sharing their analysis and perspectives in order to foster a clearer understanding among the shareholder community about the implications of the proposed sale.

About Two Seas Capital LP

Founded in 2020 and led by Chief Investment Officer Sina Toussi, Two Seas Capital specializes in event-driven investing with a strategy focusing on identifying investment opportunities that arise from legal and regulatory events. With approximately $1.4 billion in assets under management, their team is recognized for its rigorous evaluation processes and its ability to navigate complex investment scenarios effectively.

Frequently Asked Questions

What is Two Seas Capital's stance on the proposed sale?

Two Seas Capital opposes the sale of Core Scientific to CoreWeave, citing concerns about undervaluation and potential economic risks for shareholders.

Why does Two Seas believe the valuation is inadequate?

Two Seas argues that the proposed transaction leaves shareholders exposed to CoreWeave's stock price volatility and does not reflect Core Scientific's true value in the burgeoning AI sector.

How many shares does Two Seas Capital own?

Two Seas Capital holds over 19 million shares of Core Scientific, making it the largest active shareholder in the company.

What are the strategic advantages of Core Scientific?

Core Scientific is regarded as a leader in building critical HPC infrastructure, uniquely positioned to capture growth in the expanding AI market due to its low-cost power access and data center expertise.

What actions will Two Seas Capital take next?

Two Seas plans to communicate further with shareholders to encourage them to oppose the transaction and clarify the reasons for their stance on the proposed sale.

About The Author

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