425: Rumble to Acquire Northern Data in Major Exchange Offer

Rumble Inc. announced a definitive agreement to acquire Northern Data AG through a voluntary public exchange offer, expanding its high-power computing and GPU services capabilities.

Summary

• Rumble Inc. (Rumble) and Northern Data AG (Northern Data) entered into a Business Combination Agreement (BCA) on November 10, 2025, for Rumble to acquire Northern Data.
• Rumble will launch a voluntary public exchange offer to Northern Data shareholders, exchanging each Northern Data share for 2.0281 shares of Rumble Class A common stock.
• A potential cash payment of up to $200 million may be made to Northern Data shareholders who accept the offer, contingent on the successful sale or commercialization of Northern Data's Corpus Christi location for high-power computing (HPC) purposes.
• The transaction has been approved by the Boards of Directors of both Rumble and Northern Data, and Rumble's majority voting power owner, Chris Pavlovski, provided written consent.
• Closing conditions include regulatory approvals from the German Federal Financial Supervisory Authority (BaFin) and other investment control clearances, SEC effectiveness of the Form S-4 registration statement, and NASDAQ listing for Rumble shares.
• Rumble also entered into Transaction Support Agreements with key Northern Data shareholders, including Tether Investments, S.A. de C.V. (Tether), ART Beteiligungs Management GmbH, ART Holding GmbH, Aroosh Thillainathan (ART Sellers), and Apeiron Investment Group Ltd. (Apeiron), who collectively agreed to sell 44,878,325 Northern Data shares to Rumble.
• Tether's share consideration is subject to a 9.9% voting limitation in Rumble, with any excess to be issued as pre-funded warrants, and Rumble shares received by Tether are subject to a six-month lock-up period.
• Tether committed to purchase up to $75 million per year in GPU services from Rumble over a two-year initial term and up to $50 million per year in advertising and marketing services from Rumble over a two-year initial term, starting February 15, 2026.
• Tether will provide up to $200 million in equity financing to fund certain Northern Data taxes, both preand post-closing.
• Northern Data's $603 million loan receivable from Tether will be transferred to a new Rumble subsidiary; 50% will be exchanged for Rumble shares at $7.88 per share, and the remaining 50% will become a new loan from Tether to Rumble's subsidiary, with an option for Tether to convert this loan into Rumble shares one year after closing.
• A key condition for the offer document's publication is Rumble receiving an independent investigation report into Northern Data's ongoing proceedings with the European Public Prosecutors Office and the Swedish Tax Authority regarding VAT tax allegations, ensuring no 'Prohibited Findings' (e.g., unpaid VAT taxes/penalties exceeding EUR 200 million or other material adverse impacts).
• Post-closing, Rumble does not intend to enter into a domination and profit and loss transfer agreement for three years, plans to delist Northern Data shares from the open market, and may pursue a squeeze-out of minority shareholders if it holds 90% or 95% of Northern Data's share capital.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the strategic nature of the acquisition, the significant support from key shareholders like Tether, and the substantial commercial agreements (GPU services, marketing) that provide future revenue streams. However, the contingent cash consideration, the ongoing tax investigation into Northern Data, and the numerous closing conditions introduce notable uncertainties and risks, preventing a higher score.

Positives

• The acquisition provides Rumble with an expansion into high-power computing (HPC) and GPU services, aligning with strategic growth.
• Significant support from key Northern Data shareholders (Tether, ART Sellers, Apeiron) through Transaction Support Agreements, ensuring a substantial portion of shares are committed.
• Tether's commitment to purchase up to $75 million annually in GPU services and $50 million annually in marketing services from Rumble provides a substantial revenue stream post-acquisition.
• Tether's equity financing commitment of up to $200 million for Northern Data's taxes helps mitigate potential financial liabilities related to the acquisition.
• The potential for a $200 million cash consideration to Northern Data shareholders, contingent on the Corpus Christi asset sale, could enhance shareholder acceptance.
• Rumble's commitment to maintaining Northern Data's workforce, employment conditions, and office locations post-closing suggests a stable integration plan.

Negatives

• The potential $200 million cash consideration is not assured and is contingent on the successful sale/commercialization of Northern Data's Corpus Christi location, introducing uncertainty.
• Northern Data is subject to ongoing proceedings by the European Public Prosecutors Office and the Swedish Tax Authority concerning VAT tax allegations, which could pose a significant financial risk if 'Prohibited Findings' are made (e.g., over EUR 200 million in unpaid taxes/penalties).
• The transaction is subject to numerous closing conditions, including various regulatory approvals and the outcome of the independent investigation into Northern Data's tax matters, which could delay or prevent completion.
• The 9.9% voting limitation for Tether, requiring pre-funded warrants for excess Rumble shares, could complicate Tether's direct equity ownership and influence.
• The transfer of Northern Data's $603 million loan receivable from Tether involves a complex conversion into Rumble shares and a new loan, potentially impacting Rumble's capital structure and debt obligations.

Risks

• The expected timing and likelihood of the completion of the contemplated transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals, could reduce anticipated benefits or cause the parties to abandon the transaction.
• The condition to the publication of the offer document relating to the outcome of an independent investigation to be conducted by Northern Data into certain VAT tax-related allegations may not be satisfied.
• The occurrence of any event, change or other circumstances that could give rise to the termination of the transaction.
• The ability to successfully complete the proposed transaction.
• Regulatory or other limitations imposed as a result of the proposed transaction.
• The success of the business following the proposed transaction.
• The ability to successfully integrate Rumble's and Northern Data's businesses.
• The possibility that the requisite number of Northern Data's shares may not be tendered in the exchange offer.
• The risk that the parties may not be able to satisfy the conditions to closing of the proposed transaction in a timely manner or at all.
• Risks related to disruption of management time from ongoing business operations due to the proposed transaction.
• The risk that the announcement or consummation of the proposed transaction could have adverse effects on the market price of Rumble's Class A common stock or Northern Data's capital stock or the ability of Rumble and Northern Data to retain customers, retain or hire key personnel, maintain relationships with their respective suppliers and customers, and on their operating results and businesses generally.
• The risk that the combined business may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies.
• The risk of fluctuations in revenue due to lengthy sales and approval process required by major and other service providers for new products.
• The risk posed by potential breaches of information systems and cyber-attacks.
• The risks that Rumble, Northern Data or the post-combination company may not be able to effectively compete, including through product improvements and development.

Future Outlook

Rumble anticipates that the acquisition of Northern Data will strategically support the growth strategy of the ND Group on a sustainable basis, leading to expected synergies and future growth in financial and operating performance. The combined business aims to leverage Northern Data's capabilities in high-power computing and GPU services. However, the realization of these benefits is subject to successful integration, regulatory approvals, and the resolution of Northern Data's ongoing legal proceedings.

Management Comments

• The Management Board of Northern Data has unanimously determined that the Takeover Offer and the Transaction are consistent with, and will further, the business strategies and goals of the Company, and are in the best interests of the Company, its shareholders and other stakeholders.
• The Management Board and Supervisory Board of Northern Data have unanimously approved the Transaction, including the Takeover Offer, and intend to unanimously recommend that Northern Data shareholders accept the Takeover Offer and tender their shares, subject to review of the final Offer Document and their fiduciary duties.
• Rumble acknowledges that ND Group's skilled and dedicated workforce and its high competence and strong commitment are the foundation for the future success of ND Group.

Industry Context

This acquisition positions Rumble to significantly expand its footprint in the high-power computing (HPC) and GPU services sector, a rapidly growing area driven by demand for AI, data processing, and cloud infrastructure. By acquiring Northern Data, Rumble aims to integrate a key player in this space, potentially enhancing its technological capabilities and market reach. The involvement of Tether, a major cryptocurrency stablecoin issuer, as a significant shareholder and strategic partner, highlights the convergence of digital asset infrastructure with broader computing services, suggesting a move towards diversified revenue streams beyond traditional content platforms for Rumble.

Comparison to Industry Standards

• The exchange offer ratio of 2.0281 Rumble shares per Northern Data share will need to be evaluated against recent M&A transactions in the HPC and data center industry, considering Northern Data's specific assets, liabilities (including potential tax issues), and growth prospects.
• The contingent cash consideration of up to $200 million, tied to the Corpus Christi asset sale, is a common mechanism in M&A to share upside or mitigate risk, but its non-guaranteed nature requires careful assessment compared to upfront cash components in similar deals.
• Tether's strategic commitments, including GPU services purchases ($75M/year) and marketing services ($50M/year), represent significant long-term contracts that could provide a stable revenue base, comparable to long-term enterprise contracts seen in the cloud computing and data center industry, but their value depends on execution and market conditions.
• The indemnification provisions and the requirement for an independent investigation into Northern Data's VAT tax allegations (with a EUR 200 million threshold for 'Prohibited Findings') are critical due diligence and risk mitigation measures, reflecting heightened scrutiny for cross-border transactions involving companies with complex tax histories, similar to those seen in acquisitions of companies with significant international operations or regulatory exposure.

Corporate Governance

Legal Proceedings

• Northern Data is subject to ongoing proceedings of the European Public Prosecutors Office (EPPO) and the Swedish Tax Authority (STA) concerning allegations relating to the ND Group, specifically regarding VAT tax matters.
• A key condition for the publication of the Exchange Offer document is that an independent investigation report into these matters does not contain 'Prohibited Findings,' such as unpaid VAT taxes and/or related penalties exceeding EUR 200 million in aggregate, or other material adverse impacts on the combined business.

Related Party Transactions

• Tether Investments, S.A. de C.V. (Tether) is a significant shareholder of Northern Data and a key party in multiple agreements with Rumble and Northern Data.
• Tether agreed to sell 41,887,776 Northern Data shares to Rumble under a Transaction Support Agreement.
• Tether will provide an equity financing commitment of up to $200 million to fund certain taxes of Northern Data.
• Tether agreed to purchase up to $75 million per year in GPU services from Rumble over a two-year initial term.
• Tether agreed to purchase up to $50 million per year in advertising and marketing services from Rumble over a two-year initial term, starting February 15, 2026.
• Northern Data's $603 million loan receivable from Tether (Existing Node Loan) will be transferred to a Rumble subsidiary, with 50% converted into Rumble shares and 50% becoming a new loan from Tether to Rumble's subsidiary.
• Tether has committed to offer to purchase up to EUR 219 million worth of Northern Data shares from other shareholders outside the Exchange Offer.

Stakeholder Impact

• **Shareholders (Northern Data)**: Will receive Rumble Class A common stock in exchange for their shares, with a potential contingent cash payment. The value of their investment will be tied to Rumble's future performance. Those not tendering may face illiquidity if a squeeze-out occurs later.
• **Shareholders (Rumble)**: Will experience dilution from the issuance of new Class A common stock for the acquisition. The transaction is expected to expand Rumble's strategic capabilities and market position, potentially increasing long-term shareholder value.
• **Employees (Northern Data)**: Rumble has committed to safeguarding jobs, maintaining employment conditions, and respecting employee rights, aiming for a constructive dialogue and successful transition. This suggests a positive impact on job security and working conditions.
• **Customers (Rumble & Northern Data)**: The acquisition is expected to enhance Rumble's GPU services and high-power computing offerings, potentially leading to a broader range of services and improved capabilities for customers. Tether's customer agreement is a significant win.
• **Suppliers/Creditors (Northern Data)**: The $603 million loan from Tether is being restructured, and Tether is providing equity financing for taxes, which could stabilize Northern Data's financial position. Other creditors and suppliers may benefit from the increased financial backing and strategic direction provided by Rumble.
• **Regulatory Authorities**: The transaction requires significant approvals from BaFin, SEC, and other merger/investment control authorities, indicating a thorough review process to ensure compliance and fair market practices.

Next Steps

• Rumble will prepare and file a registration statement on Form S-4 with the SEC by December 31, 2025, or as promptly as practicable thereafter.
• Northern Data will provide all necessary information, including financial data, for the Disclosure Documents and cooperate with its auditor to provide consent for financial statements.
• Rumble will seek BaFin approval for the prospectus and SEC effectiveness for the Registration Statement.
• Rumble will publish the Offer Document by April 30, 2025, or as promptly as practicable thereafter, subject to regulatory approvals.
• Northern Data's Management Board and Supervisory Board will prepare and publish a reasoned statement within ten weekdays of the Offer Document's publication, recommending the offer (subject to conditions).
• Northern Data will engage a law firm to conduct an independent investigation into the European Public Prosecutors Office and Swedish Tax Authority proceedings regarding VAT tax allegations, with Rumble having observer rights.
• The parties will work to obtain required merger control and investment control clearances by December 31, 2026.
• Rumble will file an application for listing the Offer Shares on NASDAQ.
• If Rumble holds 90% or more of Northern Data shares post-closing, it may elect to squeeze out remaining minority shareholders.

Key Dates

Recommendation

The acquisition of Northern Data AG by Rumble Inc. is a strategically significant move, expanding Rumble's presence in the high-power computing and GPU services market, which aligns with current industry trends. The strong backing from Tether, including substantial commercial agreements and equity financing commitments, provides a solid foundation for future revenue and financial stability. However, the transaction is complex, with numerous closing conditions, including critical regulatory approvals and the resolution of Northern Data's ongoing VAT tax investigation. The contingent nature of the cash consideration and the potential for delays or adverse findings from the investigation introduce considerable uncertainty. While the long-term strategic benefits are compelling, the immediate risks and complexities warrant a 'hold' recommendation. Investors should monitor the progress of regulatory approvals, the outcome of the tax investigation, and the integration process before making further investment decisions.

Keywords

Rumble Inc., Northern Data AG, Business Combination Agreement, Exchange Offer, Acquisition, SEC Filing, Form 8-K, Tether Investments, GPU Services, High-Power Computing, Corporate Governance, Risk Management, VAT Tax Allegations, Merger Control, Regulatory Approvals, Shareholder Loan, Strategic Acquisition