The story behind Tron’s acquisition of BitTorrent revealed
According to a report published by Coin Desk on September 4, when Justin Sun, Tron founder bought BitTorrent in one of the most hyped and talked-about acquisitions of the year, he wasn't the only bidder. To make the case more dramatic, he wasn’t even the highest bidder.
So, what went on behind the scenes that finally tipped the balance in Justin Sun’s favor.
Though NEO Global Capital (NGC) made a higher bid than Sun, it was Sun’s offer that eventually sealed the deal.
The report cites NEO Blockchain's head of investment, Wayne Zhu, who goes on to say that NGC's bid was for $170 million, amounting to $50 million dollars more than Tron founder Justin Sun's $120 million bid. Nevertheless, Sun's offer eventually succeeded.
The acquisition was officially announced in July and it was matched by a sense of euphoria in the market. It was the first time a crypto company had successfully acquired an established web company.
Despite bidding $50 million more than Justin Sun, BitTorrent's board nonetheless said that NGC's offer was "not more favorable to the company and its shareholders" and accepted Sun's offer.
Tron made the first move
The documents accessed by Coin Desk go on to reveal further that Sun approached investor David Chao at DCM, a venture capital firm which controlled most of BitTorrent's equity, in late December 2017.
He sought to purchase a controlling stake in the company by purchasing DCM's preferred stock. Sun offered approximately $90 million to $100 million for DCM's stake.
NGC entered the picture approximately one month after these discussions and unlike Sun, NGC sought to become BitTorrent's sole owner, offering $115 million for all preferred stock and $55 million for all common stock.
Who backed away?
In mid-February, NGC revised its offer to exclude a provision that would nullify the acquisition if it was not completed within six months, a change that appears to have been considered a drawback by BitTorrent and DCM.
Just one day after NGC submitted their revised letter of intent, BitTorrent and DCM determined that the despite the higher price tag, NGC's offer was not as "favorable" as Sun's offer.
Wayne Zhu’s interpretation of events
Zhu goes on to add, “NGC had become concerned about the Committee on Foreign Investment in the United States (CFIUS). In addition, the fact that BitTorrent's primary architect, Bram Cohen, was committed to his new venture, Chia, and therefore unwilling to return to the company proved to be an impediment.”
"We were not so sure that BitTorrent is technically advanced enough to become the decentralized file project we had hoped it would be," Zhu said.
After the acquisition, reports have started surfacing that the company’s founder Justin Sun, has taken further interest in Bram Cohen’s Chia Network.
Image via Shutterstock
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