The public markets are having a hard time valuing any single AI company. Putting two together then seems like an even more formidable task. That is why the tech industry is closely watching the planned acquisition of Core Scientific by CoreWeave as a sector benchmark — particularly given a sell-off in the acquirer’s share price.
CoreWeave, an AI “hyperscaler” backed by the likes of Blackstone and Magnetar Capital, sells data centre computing power. It went public in March at a price of $40 per share.
By June, its shares rocketed to more than $180, implying a total valuation of more than $100bn. After a weak earnings report last week, its shares drifted below $100, though still well above its IPO price. The Financial Times has reported that several top holders just also unloaded some of their CoreWeave shares after a lock-up provision had expired.
In early July, CoreWeave struck a deal to buy the publicly traded Core Scientific, a major supplier of data centre capacity and power to CoreWeave. CoreWeave said the combination would save over $10bn in expected future payments to Core Scientific, an example of a so-called vertical integration acquisition.
But instead of stumping up third-party debt to pay cash for Core Scientific, CoreWeave is paying in its own shares, giving up about a tenth the company. When the deal was announced, Core Scientific was valued at an equity value of $9bn, a 60 per cent premium to where it traded prior to the deal rumours.
