SPAC: BuzzFeed To Go Public In $1.5B Deal

In the world of SPACs, there’s a new merger that isn’t the usual type we’re accustomed to. Usually, companies merging…

BuzzFeed logo

In the world of SPACs, there’s a new merger that isn’t the usual type we’re accustomed to. Usually, companies merging with SPACs are high-growth tech startups with big ambitions or more established traditional businesses. But, in this case, the new merger is BuzzFeed, yes that “click farm” BuzzFeed you know.

  • BuzzFeed has agreed to merge with 890 Fifth Avenue Partners Inc. (Nasdaq: ENFA) and become a public company. The merger terms value the media company at $1.5bn.
  • From its merger, BuzzFeed will get $288mn of cash held in trust by the SPAC and then a $150mn PIPE round from a group of asset managers, summing up to $438mn.
  • A sizeable portion of the merger proceeds will finance a new BuzzFeed acquisition of Complex Networks, a media brand focused on ‘youth culture’. BuzzFeed is paying $200mn in cash and $100mn in equity for the media brand.
  • The merger is scheduled for completion in Q4 2021, upon which BuzzFeed will start trading on the Nasdaq exchange.
  • BuzzFeed is that site known for pumping out ‘viral’, lazy content such as “10 things you didn’t know about [insert whatever here]” or”you wouldn’t believe why! [insert whatever happened here]”. It built a business on that before branching out into more serious news with its BuzzFeed News brand in 2011, which recently won a Pulitzer Prize.
  • More recently, the company expanded by buying HuffPost, a popular news blog, and now Complex Networks. All in, BuzzFeed Inc is now a holding company for several media brands and pitches itself as such to investors. It’s akin to the “IAC” of the digital media world.
  • A public markets debut will see BuzzFeed test the waters for investor reception towards digital media companies, which we predict won’t be good, especially at a time when such companies are fighting hard for advertising revenue with many in-group rivals and as well tech giants like Google and Facebook.
  • While some OG media companies like The Wall Street Journal and New York Times have built strong businesses around subscriptions, it hasn’t been the case for newer startups like BuzzFeed with an audience base that’ll hardly pay for news.
  • BuzzFeed’s SPAC merger will finally deliver an exit to its investors who have waited for 15 years since its start. The company has raised $500mn in venture funding and was valued at $1.7bn in its heyday in 2016. But five years later, it got a valuation lower than that in its merger, signaling not-good sentiment from investors towards the media space.

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