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BuzzFeed is going public Monday via a merger with a special purpose acquisition company, or SPAC, that values it at about $1.5 billion. That is less than the $1.7 billion the digital media group was reportedly worth when NBCUniversal invested in it a few years ago.
But the deal makes BuzzFeed a public company, which many of its smaller competitors have been unable to achieve.
BuzzFeed’s reception on the stock market will serve as a test for others, like Vice and Vox, that have considered a similar path.
The SPAC market has “flipped” since BuzzFeed first pursued its deal, BuzzFeed CEO Jonah Peretti told the DealBook newsletter. SPAC deals took off last summer, amid high valuations that attracted digital media companies (among many others). But as SPACs have fallen out of favor, many investors have asked for their money back before mergers, a feature of the financial vehicles that go public on the promise of identifying an acquisition target at a later date.
Rising investor redemptions have left SPACs’ merger partners with less money than anticipated. BuzzFeed, which ended up with $16 million from the SPAC merger instead of more than $250 million that was raised by the vehicle before the deal, structured the transaction with that shift in mind, Peretti said, including a $150 million convertible bond.
“I don’t care how we go public,” Peretti said. “Once we saw that we had our path through that market – even though the market was cold – it was just a means to an end to get public.”
CloseAs a listed company, BuzzFeed plans to buy competitors in an industry where scale is crucial. As part of the SPAC deal, BuzzFeed announced an acquisition of sports and entertainment publisher Complex, adding to its purchase of Huffington Post in November 2020.
E-commerce is a key part of BuzzFeed’s growth plan. With many of its competitors putting content behind subscription paywalls, Peretti said there was an opportunity to “be the place where you can reach the broad public.” He sees other chances to accelerate BuzzFeed’s growth, like its shopping site that sells products directly to consumers, including via streaming video shows.
This article originally appeared in The New York Times.
