CleanSpark’s acquisition of GRIID reiterates CLSK as a Buy

Analysts at H.C. Wainright are bullish on CleanSpark’s most recent acquisition, projecting upside potential to $27.

On Thursday, CleanSpark (CLSK) entered a definitive agreement to acquire GRIID Infrastructure (GRDI) in an all-stock deal valued at $155 million. 

The final terms are still pending, but initial estimates by H.C. Wainright suggest CleanSpark might pay around $86 million, aligning with GRIID’s market cap as of June 27. This acquisition will require CleanSpark to issue 5.2 million shares, approximately 2.5% of its total shares, assuming a share price of $16.587.

Analysts at H.C. Wainright “expect the deal to significantly accelerate CleanSpark’s development of high quality and relatively low-cost power infrastructure in the coming years, as we reiterate our Buy rating.” 

CleanSpark is taking on all of GRIID’s debt and other responsibilities. To help GRIID during the transition, CleanSpark has given a $5 million working capital loan and a $50.9 million pay-down bridge loan. These loans are secured and have seniority over GRIID’s other debts.

CleanSpark is currently traded at $16.23 per share.

Energy acquisition terms

Despite the higher-than-average cost per megawatt (MW) of recent transactions, CleanSpark sees GRIID’s substantial energy pipeline in Tennessee as a strategic asset. The management anticipates adding over 400 MW of data center infrastructure in Tennessee within the next two and a half years, with plans to bring 100 MW online by the end of 2024 and 200 MW by 2025. 

Combined with its existing 450 MW capacity and other expansion projects, CleanSpark is trying to achieve over 1 GW of total infrastructure capacity by 2026.

The acquisition, set to close in Q3 2024, is subject to GRIID shareholder approval and other conditions.