Strategy Reject Mergers! Saylor Warns Bitcoin Treasury Integration is Full of Uncertainty

Strategy Chairman Michael Saylor stated that the company currently has no plans to acquire other Bitcoin treasury companies due to the many uncertainties involved in such operations. He added that there are many uncertain factors, and these matters often take six to nine months or even a year to resolve. An idea that seems good at the start may not be a good idea six months later.

Saylor Reveals Acquisition Risks, There Are Six Major Uncertainties

(Source: Youtube)

According to founder Michael Saylor, the strategy is unlikely to reach an acquisition deal with its Bitcoin purchasing competitors due to high risks. This decision is not made impulsively, but is based on careful consideration of the many uncertainties in the merger and acquisition process. Saylor pointed out that acquisition deals often take six to nine months or even a year, during which the market environment, regulatory policies, and company valuations can undergo significant changes.

A seemingly good idea at the beginning may not be a good idea six months later. This statement reveals the core characteristics of the crypto market: rapid changes and unpredictability. In traditional corporate acquisitions, a six-month transaction cycle is normal, but in the crypto market, Bitcoin prices can fluctuate by 50% or even more during this period. Such drastic volatility can fundamentally alter the economic logic of acquisitions.

Strategy CEO Phong Le added that for software companies (i.e. Strategy's main business), acquisitions are “very difficult.” He said, “There are often some unknown factors behind the assets you actually purchase, and this is also true for the acquisition of Bitcoin treasury companies.” This cautious attitude reflects Strategy's management's emphasis on risk management.

Six Major Risks of Acquiring Bitcoin Treasury Companies

Valuation Volatility Risk: The dramatic fluctuations in Bitcoin prices make it difficult to determine the valuation of the target company.

Transaction Delay Risk: The market environment may change completely within a trading period of 6-9 months.

Hiding Debt Risks: Software companies and Bitcoin holdings may be subject to unknown legal or financial issues.

Integration Complexity: There are significant differences in the Bitcoin acquisition strategies, financing structures, and shareholder structures of different companies.

Regulatory Uncertainty: The accounting treatment and regulatory standards for Bitcoin treasury companies are still evolving.

Opportunity Cost Risk: Inability to focus on core business and Bitcoin acquisition strategy during the merger.

Analysts believe that as more industry participants join, Bitcoin treasury companies may achieve differentiated competition through acquisitions. However, Strategy's refusal indicates that not all companies view acquisitions as the best strategy. For Strategy, which already holds 640,000 Bitcoins, maintaining the current high-speed transparent purchasing strategy may be more efficient than complicated acquisitions.

Strive acquisition case becomes the first example, why doesn't Strategy follow suit?

Strive is the first merged Bitcoin treasury company, announcing at the end of September that it will acquire its competitor Semler Scientific through a stock-for-stock transaction. After the merger, the company will hold 11,006 Bitcoins. Post-merger, Strive will become the twelfth largest holder of Bitcoin among publicly listed companies, second only to Tesla. In comparison, Strategy holds 640,808 Bitcoins, the most among all companies.

Strive's acquisition strategy stands in stark contrast to Strategy's rejection attitude. Why would two Bitcoin treasury companies make such completely different choices? The answer lies in the differences in scale and strategic positioning. Strive, by acquiring Semler Scientific, has elevated its Bitcoin holdings from the thousands range to the tens of thousands range. This magnitude leap is significant for enhancing market position and attracting investor attention.

For Strategy, the situation is completely different. Holding 640,000 Bitcoins puts it far ahead of all competitors, and the acquisition of 10,000 or 20,000 Bitcoins by a company has a negligible impact on its total holdings. From this perspective, what Strategy needs more is to maintain its purchasing speed and financing capability, rather than increasing complexity through acquisitions.

In addition, the business model of Strategy has formed a clear market recognition. Investors understand the operational logic of Strategy: funds are raised through the issuance of convertible bonds and equity financing, and then all are used to purchase Bitcoin. This simple and transparent model allows investors to easily calculate the intrinsic value of Strategy. Once mergers and acquisitions are involved, complex factors such as the software business, employees, liabilities, and other aspects of the acquired company will be introduced, disrupting this simplicity.

Strategy Transparency Advantage Achieves S&P B- Rating

Although Saylor has not completely ruled out the possibility of acquisition, he has left room for Strategy to make flexible adjustments on related issues. Saylor stated, “I don't think we're going to say 'we will never, ever do that,' but we will say that our plans, strategies, and focus are on selling digital bonds, improving the balance sheet, buying Bitcoin, and communicating this message to credit and equity investors.”

Saylor emphasized that for many years, Strategy has continuously bought Bitcoin, allowing the public to instantly assess changes in asset value, and these transactions often result in appreciation. He said: “Our focus is on conducting digital transactions with high speed and transparency, selling digital bonds, and continuously purchasing Bitcoin. We believe that a highly transparent and predictable business model is an important advantage that helps investors evaluate the quality and growth prospects of the company.”

This transparency advantage has begun to gain recognition from traditional financial institutions. According to S&P Global Ratings on Monday, Strategy received a “B-” credit rating, classified in the speculative non-investment grade category alongside high-risk bonds (Junk Bond), but the company's outlook is stable. This is the first time Strategy has received a credit rating, marking its strategic transition from a technology company to a Bitcoin treasury company, gaining initial recognition from the mainstream financial system.

Le stated that during the rating process, the company did not receive additional points for holding Bitcoin, and that portion was directly deducted from the equity. He indicated that to improve the company's rating, “at some point in the future, Bitcoin should be treated distinctly and handled as a capital asset, which would be more appropriate.” This comment reveals the accounting challenges faced by Strategy: current accounting standards classify Bitcoin as an intangible asset, allowing only impairment to be recorded and not appreciation, distorting the true financial condition of the company.

Strategy The Three Core Elements of Business Model

Digital Bond Sales: Raising a large amount of funds through the issuance of convertible bonds at low interest rates.

Balance Sheet Optimization: Continuously improve the financing structure and reduce capital costs.

Bitcoin Continuous Acquisition: All the raised funds will be used to purchase Bitcoin, maintaining a fast and transparent purchasing pace.

The simplicity and transparency of this business model make Strategy one of the most direct tools for investors to gain exposure to Bitcoin. If acquisitions are involved, it will undermine this simplicity and increase the analytical difficulty for investors.