07:09 AM EDT, 08/21/2024 (MT Newswires) -- Bitfarms ( BITF ) , a global vertically integrated Bitcoin data center company, and Stronghold Digital Mining ( SDIG ) Wednesday agreed to terms under which Bitfarms ( BITF ) will acquire Stronghold in a stock-for-stock deal.

The transaction is valued at approximately US$125 million plus the assumption of approximately US$50 million in debt.

Stronghold was at last look up 45% in U.S. premarket trade at near US$4.26 -- it was up by more than 50% a short time ago -- giving it a market capitalization of about US$42.5 million. Bitfarms ( BITF ) was trading around 5% lower in U.S. premarket.

Among deal highlights, Bitfarms ( BITF ) says it will expand and rebalance its Energy Portfolio to near 50% in the U.S. by year end 2025, which it adds is consistent with its strategic plan.

Bitfarms ( BITF ) said the deal provides it with a "clear path" to 950 MW active power capacity and adds 4.0 EH/s to Bitfarms' ( BITF ) hashrate with expansion capacity of potentially over 10 EH/s with fleet refresh. It added the deal will also give it 165 MW of nameplate generated power capacity and adds 142 MW of PJM import capacity with long term expansion potential up to 790 MW.

On details, Bitfarms ( BITF ) said the transaction has been unanimously approved by the boards of both companies and is expected to close in the first quarter of 2025, subject to the receipt of Stronghold shareholder approval, applicable regulatory approvals, certain third-party consents and other customary closing conditions. Upon closing, Gregory Beard, CEO, president and chairman of Stronghold will work in an advisory capacity.

Under the terms of the merger agreement, Stronghold shareholders will receive 2.52 shares of Bitfarms ( BITF ) for each share of Stronghold they own, representing consideration per share of US$6.02 and a 71% premium to the Stronghold 90-day volume-weighted average price on Nasdaq as of August 16, 2024. At close, Stronghold shareholders are expected to own just under 10% of the combined company, based on the current issued and outstanding shares of each company.

The transaction is seen achieving an estimated $10 million in annual run-rate cost synergies.