425: CoreWeave to Acquire Core Scientific in All-Stock Merger

CoreWeave, Inc. has entered into a definitive agreement to acquire Core Scientific, Inc. in an all-stock transaction, with Core Scientific shareholders receiving 0.1235 shares of CoreWeave Class A Common Stock for each of their shares.

Summary

• CoreWeave, Inc. (Parent) will acquire Core Scientific, Inc. (Company) through a merger where Miami Merger Sub I, Inc., a wholly owned subsidiary of CoreWeave, will merge into Core Scientific.
• Each outstanding share of Core Scientific common stock (excluding treasury shares or those held by Parent/Merger Sub) will be converted into the right to receive 0.1235 fully paid and non-assessable shares of CoreWeave Class A Common Stock.
• Certain Core Scientific restricted stock unit (RSU) awards and performance stock unit (PSU) awards held by specified individuals (including Adam Sullivan, Jim Nygaard, and Todd DuChene) or non-employee directors will fully vest and convert into CoreWeave Class A Common Stock.
• Other unvested Core Scientific RSU and PSU awards will be converted into CoreWeave restricted stock unit awards (Parent Rollover RSU Awards and Parent Rollover PSU Awards) subject to substantially similar terms, with PSU awards determined at a 300% performance level.
• Core Scientific options with an exercise price less than the Per Company Share Price will be cancelled and converted into CoreWeave Class A Common Stock; other options will be cancelled without consideration.
• Core Scientific Convertible Notes (2029 and 2031) will be converted into a right to convert into CoreWeave Class A Common Stock, adjusted by the Exchange Ratio.
• Core Scientific Warrants (Tranche 1 and Tranche 2) will be converted into New Tranche 1 Warrants and New Tranche 2 Warrants, respectively, exercisable for CoreWeave Class A Common Stock with adjusted exercise prices.
• The merger is intended to qualify as a reorganization for U.S. federal income tax purposes under Section 368(a) of the Code.
• A termination fee of $270.0 million is payable by Core Scientific to CoreWeave under specific circumstances, such as an Adverse Recommendation Change or termination to enter into a Superior Proposal.

Sentiment

Score: 8

Explanation: The document announces a definitive merger agreement, a significant positive development for both companies, particularly for Core Scientific shareholders who will receive shares in CoreWeave. The unanimous board approvals and the intention for a tax-free reorganization indicate a well-structured and mutually beneficial transaction. While standard merger-related risks are disclosed, the overall tone and content suggest a strong positive outlook for the combined entity's future in the high-performance computing and AI sectors.

Positives

• Core Scientific shareholders will receive CoreWeave Class A Common Stock, potentially benefiting from CoreWeave's strategic direction and growth in high-performance computing.
• The boards of directors of both CoreWeave and Core Scientific have unanimously approved the merger, indicating strong internal support and strategic alignment.
• The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes, which is generally favorable for shareholders.
• Certain equity awards for key Core Scientific individuals and non-employee directors will fully vest upon the merger, providing immediate value.

Negatives

• Core Scientific shareholders will no longer hold direct equity in Core Scientific, transitioning to CoreWeave shares.
• Core Scientific faces a significant termination fee of $270.0 million if the merger agreement is terminated under certain conditions, such as a change in recommendation or pursuing a superior proposal.
• Company Options that are 'out of the money' (exercise price greater than Per Company Share Price) will be cancelled without any consideration.
• The transaction may lead to potential litigation, business disruptions, and diversion of management attention during the pendency of the merger.

Risks

• The completion of the proposed transaction on anticipated terms, or at all, including obtaining necessary regulatory approvals and Core Scientific stockholder approval.
• The anticipated tax treatment of the merger may not be realized.
• Unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, and future prospects of the combined company may differ from expectations.
• The ability of CoreWeave and Core Scientific to successfully integrate their businesses and achieve anticipated synergies and value creation.
• Potential litigation related to the proposed transaction that could be instituted against either company or their directors and officers.
• Disruptions from the proposed transaction could harm CoreWeave's or Core Scientific's business, including current plans and operations, and divert management's time and attention.
• Potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction.
• Rating agency actions and the ability of CoreWeave and Core Scientific to access shortand long-term debt markets on a timely and affordable basis.
• Legislative, regulatory, and economic developments and actions targeting public companies in the artificial intelligence, power, data center, and crypto mining industries, and changes in relevant laws, regulations, and policies.
• Potential business uncertainty, including the outcome of commercial negotiations and changes to existing business relationships during the pendency of the proposed transaction.
• Restrictions during the pendency of the proposed transaction that may impact Core Scientific's ability to pursue certain business opportunities or strategic transactions.
• Acts of terrorism, war, civil unrest, or other political or security disturbances.
• Dilution caused by CoreWeave's issuance of additional shares of its securities in connection with the proposed transaction.
• The possibility that the transaction may be more expensive to complete than anticipated due to unexpected factors or events.
• Impacts of pandemics or other public health crises.
• Global or regional changes in the supply and demand for power and other market or economic conditions.
• Changes in technical or operating conditions, including unforeseen technical difficulties.
• Development delays at CoreWeave and/or Core Scientific data center sites, including delays in converting crypto mining facilities to high-performance computing sites.

Future Outlook

The merger aims to combine CoreWeave and Core Scientific, with Core Scientific becoming a wholly-owned subsidiary of CoreWeave. The combined entity is expected to integrate their businesses, achieve anticipated synergies and value creation, particularly in the artificial intelligence, power, and data center industries. This includes the strategic conversion of crypto mining facilities to high-performance computing sites to meet growing demand for AI computing power. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

Management Comments

• The Core Scientific Board unanimously determined that the Merger Agreement and the Contemplated Transactions are advisable, fair to, and in the best interests of the Company and its stockholders.
• The CoreWeave Board unanimously determined that the Merger Agreement and the Contemplated Transactions are advisable and in the best interests of Parent and its stockholders, and approved the issuance of shares of Parent Class A Common Stock, New Tranche 1 Warrants, and New Tranche 2 Warrants in connection therewith.
• The Merger Sub Board unanimously determined that the Merger Agreement and the Contemplated Transactions are advisable and in the best interests of Merger Sub and its sole stockholder.

Industry Context

This merger represents a significant strategic move within the evolving digital infrastructure sector, particularly at the intersection of high-performance computing (HPC), artificial intelligence (AI), and cryptocurrency mining. CoreWeave, an HPC cloud provider, is acquiring Core Scientific, a major data center and crypto mining company. This aligns with a broader industry trend where existing energy-intensive crypto mining infrastructure is being repurposed or expanded to support the rapidly growing demand for AI computing power and data center capacity. The transaction could significantly enhance CoreWeave's operational scale and data center footprint, leveraging Core Scientific's assets for AI workloads.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess against global benchmarks. It broadly references 'other participants in the industries in which the Company and its Subsidiaries operate' and 'other participants in the industries in which Parent and its Subsidiaries operate' when defining Material Adverse Effects, but offers no specific names or metrics for comparison.

Corporate Governance

Legal Proceedings

• The document notes 'Transaction Litigation' as a potential risk, referring to any legal action (including class action or derivative litigation) challenging the merger or related disclosures.
• Neither Core Scientific nor its subsidiaries have received any written notice from any Governmental Body alleging material violation or noncompliance of any applicable Law or material Permit since June 30, 2022.
• No material fines, assessments, cease and desist orders, or suspensions/revocations of Permits have been asserted against Core Scientific or its subsidiaries since June 30, 2022.
• No internal investigations concerning any material allegations of fraud or malfeasance have been conducted by Core Scientific or its board since June 30, 2022.

Related Party Transactions

• Since June 30, 2022, there have been no transactions, agreements, arrangements, or understandings in effect that would be required to be disclosed under Item 404(a) of Regulation S-K that have not been otherwise disclosed in Core Scientific's SEC Documents filed prior to the date of the agreement.
• Since March 3, 2025, there have been no transactions, agreements, arrangements, or understandings in effect that would be required to be disclosed under Item 404(a) of Regulation S-K that have not been otherwise disclosed in Parent's SEC Documents filed prior to the date of the agreement.

Stakeholder Impact

• Shareholders of Core Scientific will exchange their shares for CoreWeave Class A Common Stock, becoming shareholders of CoreWeave.
• Certain Core Scientific equity award holders (specified individuals and non-employee directors) will experience full vesting of their awards upon the merger.
• Other Core Scientific equity award holders will have their awards converted into CoreWeave equity awards with substantially similar terms.
• Core Scientific employees will receive comparable base salary/wages, target cash incentive opportunities, and employee benefits for at least one year post-merger, and will be eligible for Parent's 401(k) plan.
• Directors and officers of Core Scientific will retain indemnification, expense advancement, and exculpation rights for six years post-merger, backed by a tail D&O insurance policy.
• CoreWeave shareholders will experience dilution due to the issuance of new shares for the acquisition.
• Creditors holding Core Scientific Convertible Notes will have their conversion rights adjusted to CoreWeave Class A Common Stock.
• Core Scientific will work to release liens on its assets related to certain indebtedness, which could impact existing creditors.

Next Steps

• Core Scientific must obtain the Company Stockholder Approval for the merger.
• CoreWeave will prepare and file a Registration Statement on Form S-4 with the SEC, which will include Core Scientific's proxy statement.
• The Registration Statement must become effective under the Securities Act, and no stop order suspending its effectiveness should be in effect.
• The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 must expire or be terminated.
• The shares of CoreWeave Class A Common Stock to be issued in the merger must be approved for listing on the Nasdaq Global Select Market.
• Core Scientific will mail the Proxy Statement to its stockholders as promptly as practicable after the Registration Statement is declared effective.
• Core Scientific will convene and hold a meeting of its stockholders to obtain the Company Stockholder Approval.
• Core Scientific will take all actions required by the terms of its Convertible Notes Indentures as a result of the merger.
• Parent and the Company will make necessary provisions for the assumption by Parent of the Company's covenants under the Company Warrant Agreement and Contingent Value Rights Agreement.
• Core Scientific will cooperate with Parent to delist Core Scientific Common Stock, Tranche 1 Warrants, and Tranche 2 Warrants from Nasdaq and deregister them under the Exchange Act after the Effective Time.
• Core Scientific will use commercially reasonable efforts to spin off and terminate its 401(k) plan prior to the Closing Date.
• Parent will make Core Scientific employees eligible to participate in a Parent 401(k) plan and allow rollover contributions.
• Parent will post a duly completed IRS Form 8937 on its website not later than forty-five (45) days after the Closing Date.

Key Dates

Recommendation

Keywords

Merger, Acquisition, CoreWeave, Core Scientific, SEC Filing, Stock-for-Stock, Artificial Intelligence, Data Center, High-Performance Computing, Cryptocurrency Mining, Corporate Governance, SEC, Nasdaq, Equity Awards, Convertible Notes, Warrants, Reorganization