Michael Saylor: MicroStrategy Not Interested in Bitcoin Treasury Company Acquisitions

Key Takeaways

• MicroStrategy is not currently pursuing mergers and acquisitions in the Bitcoin treasury company space.
• Focus is on selling digital credit, improving the balance sheet, and buying Bitcoin.
• Mergers and acquisitions in the software sector are complex and uncertain.
• MicroStrategy's transparent business model makes it easier for analysts to assess the company.
• S&P Global Ratings assigns MicroStrategy a 'B-' credit rating with a stable outlook.

MicroStrategy's strategy chairman, Michael Saylor, stated that his company is not interested in acquiring other Bitcoin treasury companies, citing the uncertainty inherent in such endeavors. However, Saylor did not completely dismiss the possibility.

“Generally, we don’t have any plans to pursue M&A activity, even if it would look to be potentially accretive,” Saylor told investors during MicroStrategy’s third-quarter earnings call. “There’s just a lot of uncertainty, and these things tend to stretch out six to nine months or a year. An idea that looks good when you start might not still be a good idea six months later.”

Analysts have suggested that Bitcoin treasury companies may need to start buying each other as the number of players in the sector increases and companies compete to differentiate themselves from their rivals. Strive is the first Bitcoin treasury company to conduct a merger, announcing in late September that it would acquire its rival, Semler Scientific, in an all-stock deal, resulting in the combined firm holding 11,006 BTC. This would give Strive the 12th-largest Bitcoin holdings among public companies, behind Tesla. In comparison, MicroStrategy holds 640,808 BTC, the largest holdings of any company.

Never Say Never: Saylor

Saylor didn’t entirely rule out an acquisition, providing MicroStrategy with some flexibility to adjust its stance on the matter. “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 said.

MicroStrategy CEO Phong Le added that mergers and acquisitions for software companies, MicroStrategy’s primary business, are “very difficult.” “There’s always something hiding behind what you actually think you purchase,” he said. “I would say the same thing about acquiring Bitcoin treasury companies.”

Bitcoin Focus Eases Analysis

Saylor stated that MicroStrategy's multiple Bitcoin purchases over the years have enabled the public to “instantly calculate whether it’s accretive or dilutive,” claiming they were “generally all accretive.” “Our focus is to do high-speed transparent digital transactions and sell digital credit and buy Bitcoin,” he said. “We think that it’s a big advantage of the company that the business model is so transparent, predictable, and clear because the business model is predictable.”

Saylor argued that this model makes it easier for equity and credit analysts to make informed decisions about the company and assess its quality. S&P Global Ratings on Monday gave MicroStrategy a “B-” credit rating, placing it in the same speculative, non-investment-grade category as junk bonds, but stated that the company’s outlook was stable. Le noted that MicroStrategy didn’t receive any credit for its Bitcoin holdings in the rating, which was deducted from the company’s equity. He mentioned that for the company’s rating to improve, it would be “appropriate at some point in time that Bitcoin be treated differently, and as a capital asset.”