This article was originally published on TipRanks.com
Bitcoin mining company Riot Blockchain, Inc. (RIOT) recently revealed that it has acquired an engineered electrical equipment solutions provider, Ferrie Franzmann Industries, LLC, also known as ESS Metron, for $50 million.
Following the news, shares of the company dropped 4.7% on Wednesday. The stock, however, pared its losses by 1.8% to close at $36.24 in the extended trading session.
The company will finance the acquisition through 715,413 shares of Riot common stock and $25 million in cash.
Implications of the Deal
With the acquisition, Riot Blockchain will be able to gain access to highly engineered electrical equipment solutions, which are imperative for successfully deploying Bitcoin mining operations at scale.
Notably, the company’s position in the electrical supply chain will also receive a boost, as ESS Metron is a leading supplier to numerous third-party clients.
The CEO of Riot Blockchain, Jason Les, said, “The successful acquisition of ESS Metron marks yet another milestone in establishing Riot as a leader in Bitcoin mining. Riot’s strategic position across the electrical supply chain is significantly enhanced as the Company will benefit from ESS Metron’s existing relationships with leading electrical suppliers globally.”
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Recently, H.C. Wainwright analyst Kevin Dede reiterated a Buy rating on the stock with a price target of $50, which implies upside potential of 40.5% from current levels.
Consensus among analysts is a Strong Buy based on 4 unanimous Buys. The average Riot Blockchain price target of $46.75 implies upside potential of 31.3% from current levels.
Riot Blockchain scores a 7 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations. Shares have gained 318.3% over the past year.
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