Core Scientific Inc. shareholders have voted down a proposed $9 billion takeover bid by CoreWeave Inc., claiming that the acquisition undervalued the data center company.

The takeover offer, announced in July, would have seen Core Scientific shareholders exchange each of its shares for 0.1235 shares of CoreWeave Class A stock. CoreWeave pitched the merger as a strategic play to expand its footprint in high-performance data centers while gaining access to Core Scientific’s U.S. infrastructure footprint, including more than 1 gigawatt of operational capacity.

Core Scientific investors, however, balked at the valuation and structure and argued that the all-stock deal undervalued Core Scientific’s recent recovery and growth potential in the booming artificial intelligence colocation market.

The decision to reject the offer didn’t come as a great surprise, as activist shareholders, led by Two Seas Capital LP, urged peers to vote against the deal. According to Reuters, proxy adviser Institutional Shareholder Services also recommended a no vote, contending that Core Scientific should continue going alone given its considerable success as a standalone company.

Other concerns raised by shareholders included that the all-stock deal exposed them to potential downside risk if CoreWeave’s share price, which has been volatile since its March Nasdaq listing, were to decline before or after closing.

In a statement, Michael Intrator, co-founder, chairman and chief executive of CoreWeave, said that “we respect the views of Core Scientific stockholders and look forward to continuing our commercial partnership. CoreWeave’s strategy remains unchanged. We will continue to execute with discipline against our roadmap to create long-term shareholder value, including through opportunistic and strategic mergers and acquisitions.”

Founded in 2017, Core Scientific started as a company building data centers for cryptocurrency mining before expanding its model into a broader digital-infrastructure provider.

Today it offers high-density colocation and hosting services for third-party clients and markets itself as a provider of computing infrastructure optimized for AI, machine learning and cloud workloads. The company offers high power-density racks, rapid deployment capability and large footprints of contracted power with more than 1,300 megawatts of contracted power capacity.

While having diversified beyond cryptocurrency mining alone, Core Scientific still supports crypto mining operations while increasingly growing revenue streams from colocation contracts with enterprise and AI compute customers.

One of its largest customers, in fact, is CoreWeave. It relies on Core Scientific data centers to power its public cloud, which is optimized to run AI workloads.

Photo: Core Scientific