A major shareholder in Core Scientific, a prominent developer and operator of large-scale data centers, has publicly declared his intention to vote against the proposed acquisition of the company by its competitor, CoreWeave. The decision will be made in an upcoming vote among Core Scientific’s shareholders and could have significant implications for the trajectory of both firms. Trip Miller, the founder and managing partner of the Memphis-based investment firm Gullane Capital, explained in an interview with Business Insider that the financial logic underlying the current offer left him with no other conclusion but to oppose it, stating candidly that given the current terms, he would be compelled to vote against the merger.

Gullane Capital is no minor player in this equation. As the third-largest shareholder in Core Scientific, coming only after institutional investment giants Vanguard and BlackRock, the firm possesses an equity stake valued near $200 million. Miller’s outspoken opposition adds considerable weight to the growing wave of dissent among investors, many of whom are questioning the wisdom and valuation of what had been expected to become one of the largest data center mergers of the year. The proposal, originally structured as a roughly $5 billion takeover, was intended by CoreWeave—a rapidly ascending force in AI cloud computing—to accelerate its expansion while mitigating its surging operational costs. Yet, as CoreWeave’s stock price has declined, the real economic value of the offer has eroded, reinforcing fears that the proposed transaction severely undervalues Core Scientific just weeks before the decisive shareholder vote.

Opposition has not been limited to Gullane Capital. Two Seas Capital, another significant Core Scientific investor owning approximately 6.3% of its shares, has also taken a firm stance against the deal. On October 14, Two Seas released a detailed presentation outlining its objections, arguing that the acquisition was inadequately profitable for existing shareholders and did not sufficiently account for fluctuations in CoreWeave’s stock value. The firm went so far as to urge all shareholders to reject the proposal during the October 30 vote. CoreWeave’s leadership, however, has stood its ground. Michael Intrator, the company’s CEO based in Livingston, New Jersey, responded four days later with a strongly worded letter characterizing the offer as the most compelling and strategically sound path forward for Core Scientific’s shareholders. He emphasized that the current terms represent CoreWeave’s final and best possible offer—an implicit warning that renegotiation was unlikely. Intrator argued that the merger promised immense synergistic benefits for both companies, enabling them to unlock long-term value through intensified vertical integration and operational efficiency, while dismissing Two Seas’ criticisms as misguided and inaccurate.

The intensifying debate extends far beyond this single transaction. CoreWeave’s meteoric rise—fueled by aggressive borrowing and massive infrastructure spending—has situated the company at the heart of a larger conversation about whether the current AI-driven investment boom represents a sustainable business revolution or a speculative bubble. When CoreWeave first announced the buyout in July, the agreement valued Core Scientific at approximately $9 billion, or around $20.40 per share—a significant 66% premium to its prevailing market price at the time. However, market dynamics have since shifted dramatically: CoreWeave’s share price has declined, while Core Scientific’s has climbed. As a result, the stock conversion deal now values Core Scientific’s shares at about $17 each, more than ten percent below their current market value of roughly $19 per share. This inversion in relative valuations has further sowed doubt among investors about the prudence of proceeding under the current terms, particularly as neither company has responded to media requests for comment.

“This deal simply doesn’t make sense,” Miller explained, adding that the transaction’s structure effectively prices his existing holdings below their current market worth. “It’s a flawed structure that offers shareholders less value than what they already have,” he concluded, encapsulating the growing investor frustration. His remarks echoed a broader skepticism that has followed CoreWeave from the moment it went public. Since its somewhat volatile initial public offering in March, the company’s market capitalization has ballooned to around $70 billion—over three times its initial valuation—propelled by massive bets on artificial intelligence and cloud infrastructure. During this ascent, CoreWeave has signed blockbuster partnerships with major technology behemoths including OpenAI, Meta, Microsoft, and Nvidia. It has also poured billions into acquiring AI developers and cloud service providers, fortifying its capabilities in order to meet the insatiable computing demands of next-generation AI systems.

On its second-quarter earnings call, CEO Michael Intrator elaborated that the company’s largest clients were driving the need for infrastructure of a truly global magnitude. He described CoreWeave’s expansion as “planetary” in scale—an effort to ensure that its distributed data center footprint could sustain accelerating long-term demand. By the end of 2025, CoreWeave expects to expand its operational capacity from approximately 470 megawatts to more than 900 megawatts—an amount of energy capable of powering roughly one-fifth of New York City on an average day. Acquiring Core Scientific would nearly double that capacity while expanding CoreWeave’s contracted power pipeline by 50%, pushing its future operations to over 3 gigawatts. These ambitions underscore how essential the potential merger could be for the company’s infrastructure dominance, even as financial alarms grow louder.

CoreWeave’s second-quarter financial results revealed that despite extraordinary growth—$1.2 billion in revenue, more than double the prior year’s figure—its operational margins had plunged precipitously from 20% to a mere 2%. This contraction vividly illustrates how rising costs, particularly related to financing and energy, are eroding profitability. The company’s debt burden, which swelled to $11.2 billion by the end of the same quarter—a 40% increase since the beginning of the year—carries interest rates between 7% and 15%, depending on the instrument. Analysts such as Gil Luria have voiced concern that these high borrowing costs are incompatible with the company’s shrinking margins, likening CoreWeave’s business model to “selling $20 bills for $15.” Luria went so far as to question whether the business, in its current form, is economically sustainable at all.

From CoreWeave’s perspective, however, the economic rationale for acquiring Core Scientific remains compelling. The company currently rents approximately 270 megawatts of data center space from Core Scientific, and full ownership would allow it to eliminate an estimated $10 billion in long-term lease expenses over the next twelve years. Industry observer Raul Martynek, CEO of DataBank, which is uninvolved in the transaction, noted that this cost control strategy underscores CoreWeave’s recognition of how critical data center economics are to its future viability. Martynek characterized Intrator’s defense of the deal as an unambiguous and energetic affirmation of its strategic logic.

On the opposing side, critics continue to challenge that logic, particularly given the volatile conditions of the data center market. In its presentation, Two Seas Capital argued that the initial price of $20.40 per share substantially undervalued Core Scientific, both intrinsically and strategically. With CoreWeave’s stock having suffered one of the steepest post-announcement declines of any major acquirer since 2020, the current deal effectively values Core Scientific’s shares below their actual market price—a so-called “take-under” rather than a takeover. Intrator has responded by emphasizing that CoreWeave constitutes Core Scientific’s primary customer, representing approximately 76% of its total revenues. He warned investors to consider carefully the risks of remaining independent in such a concentrated business relationship, suggesting that rejecting the deal could expose Core Scientific to substantial operational uncertainty.

Still, dissenting investors such as Miller remain unconvinced. In his view, the data center market is currently strong enough that Core Scientific would likely appreciate significantly in value if left to operate independently. “If you give this company 18 months, it could very easily be a $30 to $40 stock,” he asserted, implying that patience and market momentum might yield far greater returns than accepting the present offer. His optimism captures a central tension in this debate: while CoreWeave champions aggressive consolidation as the path to AI-era dominance, many of Core Scientific’s investors would prefer to let value appreciation unfold organically rather than lock in what they see as a prematurely discounted exit.

Sourse: https://www.businessinsider.com/core-scientific-shareholder-oppose-coreweave-takeover-bid-2025-10