Strategy chairman Michael Saylor has indicated that his company is not actively planning to acquire other Bitcoin treasury companies, citing the inherent uncertainties involved in such transactions. While not entirely ruling out the possibility, Saylor emphasized that mergers and acquisitions (M&A) in this sector tend to be lengthy and unpredictable.
"Generally, we don’t have any plans to pursue M&A activity, even if it would look to be potentially accretive," Saylor stated during Strategy’s third-quarter earnings call. He elaborated that these processes can often extend for six to nine months or even a year, and an initial good idea might not remain so over that extended period.
These comments come amid suggestions from analysts that Bitcoin treasury companies might consider mergers as the sector grows and competition intensifies. Companies are reportedly looking for ways to differentiate themselves from rivals in an increasingly crowded market.
Strive has been noted as the first Bitcoin treasury company to engage in a merger. In late September, the company announced its intention to acquire its competitor, Semler Scientific, through an all-stock deal. This acquisition would result in the combined entity holding 11,006 BTC, making it the twelfth-largest Bitcoin holder among public companies, behind Tesla. Strategy, in contrast, holds a significantly larger 640,808 BTC, making it the company with the largest Bitcoin holdings.
Saylor's Cautious Outlook on Acquisitions
Despite his reservations, Michael Saylor did not completely dismiss the idea of acquisitions, leaving room for Strategy to reconsider its stance. "I don’t think we would ever say ‘we would never, never, never, ever,’ but what we would say is the plan, the strategy, the focus is to sell digital credit, improve the balance sheet, buy Bitcoin and communicate that to the credit and the equity investors," Saylor explained.
Phong Le, Strategy's CEO, echoed these sentiments, describing mergers and acquisitions for software companies, which constitute Strategy's primary business, as "very difficult." He highlighted the potential for unexpected issues to arise after an acquisition.
"There’s always something hiding behind what you actually think you purchase," Le stated, extending this concern to the acquisition of Bitcoin treasury companies.
Clarity and Transparency in Strategy's Bitcoin Strategy
Saylor emphasized that Strategy's consistent Bitcoin purchases over the years have provided the public with a clear framework for evaluating the company's performance. He asserted that these transactions have been "generally all accretive."
"Our focus is to do high-speed transparent digital transactions and sell digital credit and buy Bitcoin," Saylor remarked. He believes that the company's transparent, predictable, and clear business model offers a significant advantage.
This transparent model, according to Saylor, simplifies the assessment process for equity and credit analysts, enabling them to better understand and evaluate the company's quality.
In a recent development, S&P Global Ratings assigned Strategy a "B-" credit rating on Monday. This rating places the company in the speculative, non-investment-grade category, similar to junk bonds, although the outlook was assessed as stable.
Le clarified that Strategy's Bitcoin holdings were not factored into this credit rating, and in fact, the holdings were deducted from the company's equity. He suggested that for the company's rating to improve, Bitcoin would need to be treated differently and recognized as a capital asset at some point.