Rumble is said to advance scaled-back all-share bid for Northern Data

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Rumble (RUM [https://seekingalpha.com/symbol/RUM]) is moving forward with plans to acquire German data-center operator Northern Data (OTC:NDTAF [https://seekingalpha.com/symbol/NDTAF]) in an all-stock deal that would value the target below its current market cap of roughly $894 million, Bloomberg News reported Sunday, citing people familiar with the negotiations.

Both companies share backing from Tether Holdings, and the transaction could be announced in the coming days. A successful deal would accelerate Rumble’s (RUM [https://seekingalpha.com/symbol/RUM]) effort to build out a cloud-computing business alongside its video-streaming platform.

REVISED TERMS, SMALLER STAKE

Rumble (RUM [https://seekingalpha.com/symbol/RUM]) is weighing a reduced exchange ratio of about two Rumble shares for each Northern Data share, down from the 2.319-to-1 ratio floated in August, the sources said. That adjustment means Northern Data shareholders would end up with a smaller stake in the combined business than originally planned.

As part of the deal structure, Tether is expected to waive a significant portion of a €575 million loan previously extended to Northern Data, the people added.

VALUATION HIT, REGULATORY SCRUTINY

The merger was initially presented as a tie-up creating a company worth around $4.5 billion, with Northern Data investors owning roughly one-third of the combined entity. But with shares in both firms falling in recent months, the potential joint valuation has dropped to approximately $2.9 billion, based on Bloomberg calculations.

The transaction has been clouded by the revelation last month of a criminal inquiry into Northern Data (OTC:NDTAF [https://seekingalpha.com/symbol/NDTAF]). European prosecutors are examining whether the firm improperly claimed tax incentives by labeling GPU purchases as intended for artificial-intelligence workloads when they were allegedly used for crypto-mining instead.

News of the investigation pressured Northern Data’s (OTC:NDTAF [https://seekingalpha.com/symbol/NDTAF]) shares and increased scrutiny around its financing arrangements, including repayment obligations tied to the Tether loan.

ASSET SALE AHEAD OF DEAL

Northern Data (OTC:NDTAF [https://seekingalpha.com/symbol/NDTAF]) has recently taken steps to shore up liquidity, announcing the sale of its crypto-mining division, Peak Mining, for up to $200 million. The buyer, Bloomberg News reported, citing people familiar with the matter, is also linked to Tether.

MORE ON RUMBLE, NORTHERN DATA AG

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* Rumble shares climb after hours on Perplexity partnership [https://seekingalpha.com/news/4501536-rumble-shares-climb-after-hours-on-perplexity-partnership]
* Rumble signals aggressive growth mandate with Tether partnership and international wallet launch [https://seekingalpha.com/news/4483342-rumble-signals-aggressive-growth-mandate-with-tether-partnership-and-international-wallet]