Tether assists in restructuring: Rumble plans to acquire Northern Data entirely, with a new entity valued at $2.9 billion

Supported by stablecoin issuer Tether, video service provider Rumble Inc. is pushing forward with a full acquisition offer for German data center company Northern Data AG, with the deal expected to be announced in the coming days. Sources familiar with the matter reveal that this acquisition will value Northern Data at less than its current market valuation of $894 million. As a key part of the transaction, Tether will relinquish most of its €575 million loan to Northern Data and may assume tax liabilities, playing a central role in driving the merger to create a cloud computing giant.

Details of the Acquisition: Tether Acts as a “White Knight”

Rumble Inc. is accelerating its acquisition of Northern Data AG, aiming to expand its cloud computing ambitions by integrating Northern Data’s data center assets. Both companies are supported by Tether Holdings Ltd., highlighting Tether’s strategic investment outside the crypto ecosystem.

The initial plan was to create a merged entity valued at approximately $4.5 billion, with Northern Data shareholders holding one-third of Rumble. However, due to recent declines in both companies’ stock prices, Bloomberg estimates the current valuation of the new entity at around $2.9 billion.

• Equity Swap Ratio Adjustment: Northern Data shareholders will receive a smaller stake in the new entity than initially proposed. Rumble is considering reducing the exchange ratio to about two Rumble shares for each Northern Data share, down from the original 2.319 shares proposed in August.
• Tether’s Financial Support: The key to the deal is Tether’s financial intervention. It will relinquish most of its €575 million loan to Northern Data. Additionally, Tether may assume potential tax liabilities for Northern Data and might provide load commitments for the German company’s sites. This move essentially represents a strategic restructuring of Tether’s investment to ensure the continued value of its assets.

Background: Criminal Investigations and Asset Sale Pressures

The progress of this merger has not been smooth; it has been accelerated after a series of challenges. Last month, Northern Data was shadowed by a criminal investigation. European prosecutors are investigating whether the company’s purchase of graphics processing units (GPUs) at a site in northern Sweden was falsely claimed to be for AI use to obtain tax breaks, when in fact they were used for cryptocurrency mining. News of this investigation, combined with pressure to repay Tether’s loan, caused a significant drop in Northern Data’s stock price.

Last week, Northern Data announced the sale of its highly anticipated crypto mining division, Peak Mining, for up to $200 million to an undisclosed buyer. Sources indicate that this buyer is also connected to Tether. This related-party transaction further underscores Tether’s decisive influence over Northern Data’s asset disposal and corporate restructuring.

Conclusion

Rumble’s acquisition of Northern Data, supported by Tether’s generous debt forgiveness and financial backing, marks the integration of two Tether-invested companies into a potential cloud computing powerhouse. It also highlights Tether’s growing strategic influence in the global tech and data center sectors. The financial restructuring and related asset sales in this deal exemplify how crypto capital is deeply penetrating traditional industries to safeguard its investments.