Rumble Sets Sights on Northern Data for AI Expansion
Rumble, a prominent U.S. video platform known for championing independent creators, is looking to make a significant move that could propel it further into the global AI race. The company is currently exploring the possibility of an all-stock acquisition of Northern Data, a Tether-backed entity, with a proposed deal value of approximately $1.17 billion.
If the acquisition comes to fruition, Northern Data shareholders stand to receive 2.319 Rumble Class A shares for each of their own, resulting in a collective ownership stake of around 33.3% in the merged entity.
This potential deal is still in the preliminary stages and is contingent upon various factors such as due diligence, negotiations, and regulatory approvals.
Rumble Targets Northern Data’s GPU Goldmine
The impetus behind Rumble’s interest in Northern Data lies in the latter’s Taiga Cloud and Ardent data center units. Taiga Cloud boasts a substantial inventory of Nvidia H100 and H200 GPUs, which are highly sought-after components driving the current AI revolution.
Additionally, Northern Data operates five data center facilities with a combined capacity of nearly 850 MW, including a 180 MW site currently under development in Georgia. Rumble envisions that integrating this cutting-edge hardware into its infrastructure could position it as a frontrunner in the global AI cloud landscape.
Bitcoin Mining Exit Before the Deal
One stipulation of the proposed acquisition is that Northern Data must divest its Peak Mining Bitcoin business prior to finalizing any agreement. The company has already initiated the sale process, having reached a $235 million deal with U.S.-based miner Elektron Energy, structured with an upfront payment of $175 million and the remainder tied to performance metrics.
The proceeds from this transaction will be utilized to partially repay a shareholder loan from Tether, which currently holds a majority 54% stake in Northern Data.
Tether’s Full Support
Tether has expressed its full support for the acquisition plan, indicating its willingness to exchange its Northern Data shares for Rumble stock on equal terms with other shareholders. Additionally, Tether intends to become a significant GPU purchaser for Rumble through a multi-year contractual arrangement.
Market Reaction Tells Another Story
Interestingly, despite the promising prospects outlined in the proposed deal, Northern Data’s stock experienced a notable decline of 27% following the announcement, reaching its lowest level in a year. The offer price values the company at approximately $18.3 per share, representing a 32% discount relative to its most recent closing price in Frankfurt.
While the acquisition remains a tentative possibility at this stage, should Rumble proceed with the transaction, it could pave the way for intriguing developments in the realm of crypto-backed ventures.