BuzzFeed Inc, the digital-media outlet, has struck a deal to go public through a merger with blank-cheque company 890 5th Avenue Partners Inc.
The deal values BuzzFeed at $1.5 billion (€1.26 billion), according to a statement on Thursday.
The agreement, which comes after months of negotiations, confirms a Bloomberg News report in March that the parties were in talks.
As part of the deal, BuzzFeed also agreed to acquire youth-focused media company Complex Networks from Hearst Corp and Verizon Communications Inc for $300 million (€251 million), structured as $200 million (€167 million) in cash and $100 million (€84 million) in BuzzFeed equity.
890 5th Avenue has $288 million (€241 million) in trust, it said in the statement. Investors led by Redwood Capital Management, including CrossingBridge Advisors, Cohanzick Management and Silver Rock Financial, are contributing $150 million (€126 million) in convertible-note financing to support the deal.
890 5th Avenue shares were up 1.1 per cent to $9.89 in New York trading at 10.16 am (3.16pm Irish time).
The transaction caps a tumultuous time for BuzzFeed, which laid off employees during the pandemic and lost revenue from advertising and live events – before returning to profitability. The company has also bulked up. In November, it agreed to buy the HuffPost online news service from Verizon.
“With today’s announcement, we’re taking the next step in BuzzFeed’s evolution, bringing capital and additional experience to our business,” BuzzFeed chief executive Jonah Peretti said in the statement. He will continue in his role, as will chief financial officer Felicia DellaFortuna.
BuzzFeed’s valuation has slipped slightly in the blank-cheque merger. As part of the HuffPost deal, Verizon acquired a minority stake in BuzzFeed that valued the company at about $1.7 billion (€1.4 billion). That was roughly the same as BuzzFeed’s valuation in 2016, when Comcast Corp’s NBCUniversal invested $200 million (€168 million) in the business, a person with knowledge of the matter said at the time.
SPAC route
890 5th Avenue – named after the fictional Avengers mansion – is led by executive chairman Adam Rothstein and CEO Emiliano Calemzuk. Rothstein will join BuzzFeed’s board. The special purpose acquisition company (SPAC) raised $287.5 million (€240.9 million) in a January initial public offering and has said it’s focused on technology, media and telecommunications.
BuzzFeed becomes the latest digital media company to try to take the SPAC route to the public markets. Vice Media Inc, an online entertainment company, has been in talks to go public via SPAC, Bloomberg News previously reported.
Bank of America Corp advised BuzzFeed, while Cowen Inc counselled the SPAC and Allen and Co gave advice to Complex. – Bloomberg
