BuzzFeed takes special purpose route to go public

New York — BuzzFeed, the digital-media outlet, has struck a deal to go public through a merger with special purpose acquisition company (Spac) 890 5th Avenue Partners.

The deal values BuzzFeed at $1.5bn, 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 for $300m,  comprising $200m in cash and $100m in BuzzFeed equity.

890 5th Avenue has $288m in trust, it said in the statement. Investors led by Redwood Capital Management, including CrossingBridge Advisors, Cohanzick Management and Silver Rock Financial, are contributing $150m in convertible-note financing to support the deal.

890 5th Avenue shares were up 1.1% to $9.89 in New York trading at 10.16am

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 CEO Jonah Peretti said in the statement. He will continue in his role, as will CFO Felicia DellaFortuna.

BuzzFeed’s valuation has slipped in the blank-check merger. As part of the HuffPost deal, Verizon acquired a minority stake in BuzzFeed that valued the company at about $1.7bn. That was roughly the same as BuzzFeed’s valuation in 2016, when Comcast’s NBCUniversal invested $200m in the business, a person with knowledge of the matter said at the time.

890 5th Avenue — named after the fictional Avengers mansion — is led by Executive Chair Adam Rothstein and CEO Emiliano Calemzuk. Rothstein will join BuzzFeed’s board. The Spac raised $287.5m 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, an online entertainment company, has been in talks to go public via SPAC, Bloomberg News previously reported.

Bank of America advised BuzzFeed, while Cowen Inc. counselled the Spac and Allen & Co. gave advice to Complex.

Bloomberg News. More stories like this are available on bloomberg.com