Rumble Set to Acquire Northern Data in Cloud Power Play with Tether

TLDR

• Rumble is moving forward with an all-share offer to acquire Northern Data at a valuation below its market cap.
• The revised offer will provide Northern Data shareholders with fewer Rumble shares than initially proposed.
• Tether Holdings, a major financial backer, will forgo a portion of a €575 million loan to Northern Data as part of the deal.
• Northern Data has faced a criminal investigation related to potential misuse of tax incentives for AI computing.
• Northern Data sold its mining division for up to $200 million to a buyer connected to Tether.

Rumble is moving forward with an all-share offer to acquire German data center operator Northern Data. The acquisition’s valuation will fall below Northern Data’s market cap of roughly $894 million. This deal, set to be announced soon, marks a major step in Rumble’s expansion into cloud infrastructure.

Rumble’s Offer Changes as Market Valuations Drop

Rumble’s revised offer comes with a change in the exchange ratio. Previously, Northern Data shareholders were set to receive 2.319 Rumble shares per share of Northern Data. The latest offer, however, will give shareholders just 2 Rumble shares for each Northern Data share.

The combined valuation for the companies now sits at $2.9 billion. This marks a significant drop from the initial projection of $4.5 billion. Both companies have seen stock prices decline, which has impacted the final offer.

Tether Holdings, a financial backer of both companies, plays a crucial role in the deal. As part of the agreement, Tether will forgo a substantial portion of a €575 million loan to Northern Data. This move is aimed at easing Northern Data’s financial burden ahead of the merger.

Northern Data’s Struggles and Financial Restructuring

Northern Data has faced financial challenges, exacerbated by a criminal investigation. European prosecutors are examining the company for possible misuse of tax incentives meant for AI computing. Authorities are questioning whether Northern Data used GPUs purchased for AI tasks for crypto mining.

The investigation has pressured Northern Data’s share price, which has fallen in recent weeks. As a result, the company accelerated efforts to sell off non-core assets, including its mining division. Last week, Northern Data sold its mining division, Peak Mining, for up to $200 million to a buyer connected to Tether.

Northern Data’s shift in focus toward cloud and high-performance computing operations is aimed at securing stability. The sale of its mining division allows the company to streamline its operations before the merger with Rumble.

Tether’s Strong Financial Position and Future Plans

Despite Northern Data’s struggles, Tether’s financial position remains strong. Tether, the issuer of the USDT stablecoin, is experiencing record profits. Paolo Ardoino, Tether’s CEO, said, “This year we’re going to approach another $15 billion profit,” during remarks at the Plan B Forum.

Tether’s strong performance is underscored by the $183 billion in circulation of its USDT stablecoin. USDT now accounts for roughly 60% of the stablecoin market. Tether is also exploring new opportunities, including a potential $20 billion investment that would value the company at $500 billion.

Tether has also diversified its interests, recently acquiring an 11.5% stake in Italian football club Juventus. Tether’s influence extends beyond the crypto sector, as it nominates two members to the Juventus board. These moves reflect Tether’s strategy to increase its footprint across various industries.

Rumble’s planned acquisition of Northern Data is an important step in its broader strategy to expand its cloud offerings. The deal, driven by Tether’s backing, could significantly impact both companies’ futures.

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