CoreWeave to acquire Core Scientific in $9 billion all-stock deal

Artificial intelligence cloud infrastructure vider CoreWeave said Monday it plans to buy Core Scientific, a data center infrastructure operator

If the companies complete their posed acquisition, CoreWeave wouldn't have to pay rent to Core Scientific on several data center sites

Chip Somodevilla | Getty ImagesArtificial intelligence-oriented cloud infrastructure company CoreWeave said Monday it will acquire Core Scientific, a data center infrastructure vider, in an all-stock deal valued at apximately $9 billion

S of both companies rallied at the end of June after the Wall Street Journal reported that talks were underway for an acquisition. "I think that, many things that we do, it takes the market some time to internalize the value position that we are representing to the market and how it all fits together," CoreWeave CEO Mike Intrator told CNBC in an interview

In a presentation to investors, CoreWeave said the move will eliminate $10 billion in future lease obligations and significantly enhance operating efficiency. "We're not paying rent, right, for the next 15 years," Intrator said

The deal expands CoreWeave's access to power and real estate, giving it ownership of 1. 3 gigawatts of gross capacity across Core Scientific's U

Data center foot, with another gigawatt available for future growth

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After the deal closes, CoreWeave said it will be able to choose to divest Core Scientific's cryptocurrency mining, which was responsible for 89% of Core Scientific's first-quarter revenue, or make it ready to handle AI workloads. "We have gone through the conversion cess," Intrator said

CoreWeave is in the middle of an upgrade with Galaxy Digital, he said

The cost associated with converting cryptocurrency sites is less than it is for setting up new AI data centers, Intrator said

Plus, CoreWeave will be able to pursue investments from infrastructure-oriented vehicles and other sources that could result in a lower cost of capital, Agrawal said on the investor call

As of March 31, CoreWeave's weighted average rate on its short-term debt was 10

It has worked with CoreWeave since 2018, Intrator said

CoreWeave went public in March, and even after Monday's pullback, its s are worth four times more than they were at it was looking to join the Nasdaq

When CoreWeave began working on infrastructure for AI, some people said the company should be building its own data centers, but it would have been a difficult pitch to investors, Intrator said

It's constructing its own data centers, separate from Core Scientific, as it competes with major cloud infrastructure sellers such as Amazon Web Services. "When you look at the hyperscalers, they have some infrastructure that they build, and they have some infrastructure that they use third parties to der, and there's a reason that they do that, and those reasons kind of are applicable to us, too, and so that's what you're seeing," Intrator said

That implies a $20. 40 per- valuation and a 66% premium to Core Scientific's closing stock price before deal talks were reported

The two companies could have come together earlier

Last year Core Scientific said it had rejected CoreWeave's unsolicited offer to buy all outstanding s.