BuzzFeed announced Thursday plans to go public in a SPAC merger expected to close in the fourth quarter in a deal that values the company at $1.5 billion as the digital media space continues to transform.
The 15-year-old digital media group founded by Johan Peretti will also acquire digital outlet Complex Networks from Hearst and Verizon for $300 million. The SPAC, or special purpose acquisition company, called 890 Fifth Avenue Partners, holds $288 million in cash.
BuzzFeed has also secured approximately $150 million in convertible note financing led by Redwood Capital Management and including CrossingBridge Advisors, Cohanzick Management, and Silver Rock Financial. BuzzFeed will trade under the ticker BZFD. Management led by CEO Peretti will remain in place.
“With today’s announcement, we’re taking the next step in BuzzFeed’s evolution, bringing capital and additional experience to our business,” Peretti said in a statement.
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BuzzFeed’s portfolio include BuzzFeed News and HuffPost; BuzzFeed Entertainment, and Tasty Lifestyle Brands.
Complex, co-founded by Rich Antoniello and Marc Ecko in 2002, spans digital, video, audio media, and live events with an online community that reaches a multicultural audience for its brands that include Complex (pop culture), First We Feast (food entertainment), Pigeons and Planes (music discovery), Sole Collector (sneaker news), and its festival of cultural convergence ComplexCon. Following the transaction, Complex Networks will remain editorially independent, but benefit from the application of BuzzFeed’s data science, distribution network, and lines of business – including commerce – to accelerate revenue growth.
Adam Rothstein, executive chairman of 890 Fifth Avenue Partners and Greg Coleman, an advisor to 890 Fifth Avenue Partners and former BuzzFeed President, will join BuzzFeed’s board Two additional directors will be announced in the coming months.
“We looked at many different media businesses but none had the kind of brands, digital assets or business model that BuzzFeed does and which we believe can achieve the kind of meaningful growth and returns for our investors. Jonah and his team have built an incredible business. They are resilient, smart, and innovative which will be important as we move ahead,” Rothstein said.
BuzzFeed and other digital media outlets have struggled financially in recent years and the company announced waves of layoffs in 2019 and 2020 as well as cutting nearly 50 HuffPost staffers after it acquired the outlet early this year. But the company today noted “accelerating sustainable and profitable growth” and positive net earnings with a projected compound annual growth rate of 26% with growing EBITDA (earnings before interest, taxes, depreciation and amortization) margin through 2024.
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