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Major Shareholder Opposition Threatens CoreWeave’s Strategic Expansion
The artificial intelligence infrastructure sector faces potential disruption as CoreWeave’s planned $5 billion acquisition of Core Scientific encounters significant investor resistance. Gullane Capital, the third-largest shareholder in Core Scientific, has publicly declared its intention to vote against the merger, joining other dissenting voices questioning the transaction’s financial merits. This opposition comes at a critical juncture for CoreWeave, which has positioned the acquisition as central to its ambitious growth strategy in the competitive AI infrastructure market.
Trip Miller, founder of Memphis-based Gullane Capital, stated unequivocally: “Under the math of the deal today, I would have to vote no.” His firm controls approximately $200 million in Core Scientific stock, making its opposition particularly significant ahead of the October 30 shareholder vote. This sentiment echoes earlier concerns raised by Two Seas Capital, which published a detailed presentation outlining numerous objections to the takeover terms.
Deal Economics Shift as Stock Values Change
When initially announced in July, the stock conversion deal valued Core Scientific at approximately $9 billion, representing a 66% premium over its trading price at $20.40 per share. However, market dynamics have substantially altered the transaction’s economics. CoreWeave’s stock decline combined with Core Scientific’s rising share price has reduced the current offer value to around $17 per share—below Core Scientific’s recent market price of approximately $19.
“This is not a popular deal, I think for one simple reason: it’s a flawed structure,” Miller commented. “It would be a deal that would value my shares, actually, at a discount to what they currently trade for today.” This valuation discrepancy has become the central point of contention among investors who believe Core Scientific’s standalone prospects justify a higher price.
Strategic Imperatives Behind the Acquisition
CoreWeave’s aggressive expansion strategy relies heavily on vertical integration to control costs and secure capacity. The company currently leases approximately 270 megawatts of data center space from Core Scientific, and ownership would potentially save CoreWeave an estimated $10 billion in lease payments over the next 12 years. This aligns with broader industry developments where infrastructure ownership becomes increasingly valuable as demand surges.
Michael Intrator, CoreWeave’s CEO, has vigorously defended the acquisition as “the most compelling path forward for Core Scientific stockholders” and emphasized it represents CoreWeave’s “best and final” offer. In his response to critics, Intrator noted that CoreWeave accounts for 76% of Core Scientific’s revenue, positioning the merger as mutually beneficial despite shareholder concerns.
Broader Context of AI Infrastructure Competition
The proposed acquisition occurs against the backdrop of intense competition in AI infrastructure, where companies are racing to secure computing capacity and expand their operational footprints. CoreWeave has announced its intention to expand from approximately 470 megawatts of operating data centers to more than 900 megawatts by the end of 2025. The Core Scientific acquisition would more than double this capacity and expand the company’s pipeline of contracted future power by 50% to over 3 gigawatts.
This expansion mirrors similar infrastructure initiatives across the technology sector, where massive investments are being made to support growing computational demands. CoreWeave’s growth has been fueled by high-profile partnerships with AI leaders including OpenAI, Meta, Microsoft, and Nvidia, though this expansion has come with significant financial consequences.
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Financial Pressures and Investor Concerns
CoreWeave’s rapid, debt-fueled growth has raised questions about the sustainability of its business model. Second-quarter financials revealed concerning trends: while revenue reached $1.2 billion (more than double the previous year) and the revenue backlog stood at $30.1 billion, operating margins collapsed from 20% to 2% year-over-year. Simultaneously, debt ballooned to $11.2 billion, with borrowing costs ranging from 7% to 15% across various loans.
Analyst Gil Luria expressed skepticism about the company’s financial strategy, noting: “They’re selling $20 bills for 15 bucks. Sometimes we forget to ask ourselves if this business should even exist. I’m not sure the answer is yes.” These concerns reflect broader questions about whether current market trends in AI infrastructure represent sustainable growth or speculative excess.
Alternative Perspectives on Core Scientific’s Value
Opposing shareholders argue that Core Scientific’s standalone prospects in the thriving data center market justify rejecting the current offer. Miller suggested that “in a hot data center market, the belief is, if you leave this company alone for 18 months, it’s a $30 to $40 company” per share, potentially making it a more lucrative acquisition target for other suitors.
This perspective aligns with detailed analysis of the acquisition’s strategic implications and reflects how evolving recent technology landscapes are creating new opportunities for data center operators. The disagreement highlights fundamental differences in how investors value infrastructure assets in the current AI boom.
Industry Implications and Future Scenarios
The outcome of the October 30 vote will have significant ramifications for both companies and the broader AI infrastructure sector. A rejected deal could force CoreWeave to pursue alternative strategies to secure capacity, potentially through innovative infrastructure solutions or partnerships with other operators. For Core Scientific, remaining independent could provide opportunity to capitalize on the strong data center market, though it would lose its primary customer.
The situation also reflects how computational advancements are driving infrastructure demands, creating both opportunities and challenges for companies throughout the technology ecosystem. Similarly, the financial pressures facing CoreWeave demonstrate how breakthrough innovations across sectors often require substantial capital investment with uncertain returns.
Broader Academic and Regulatory Context
The acquisition debate occurs alongside broader discussions about technological governance and how society manages the rapid advancement of AI capabilities. Additionally, the competitive dynamics in the AI infrastructure space reflect how digital ecosystems evolve under pressure from technological disruption and market forces.
As the shareholder vote approaches, the CoreWeave-Core Scientific saga represents a critical test case for how the market values AI infrastructure assets and whether current acquisition strategies can withstand investor scrutiny in an increasingly volatile financial environment.
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