BuzzFeed is set to become publicly traded on Monday, after shareholders of a SPAC called 890 Fifth Avenue Partners voted to approve a previously-announced merger.
Yes, but: The vast majority of the money the SPAC raised in January was yanked, a signal that investors aren't very optimistic about BuzzFeed's future prospects.
- SPAC investors, many of whom buy in before the acquisition target is disclosed, are allowed to redeem before the deal closes.
Details: BuzzFeed said in an SEC filing following the vote, “the transaction is expected to raise at least $166.2 million," with about $150 million coming from convertible debt financing and $16.2 million from investor cash.
- That $16.2 million of investor cash is 94% less than the $287.5 million the SPAC raised in its IPO in January.
Be smart: While it's become more common in the past few months for SPAC investors to redeem prior to SPAC mergers, the BuzzFeed deal saw investors pull out at a higher rate than average.
- The Wall Street Journal noted that, since July, the average SPAC "has lost about 60% of its money before its deal goes through, up from roughly 25% in the first seven months of the year."
The big picture: Once the company begins publicly trading on the Nasdaq next week, existing BuzzFeed investors will finally be able to cash out. Many have waited more more than a decade.
- BuzzFeed wanted to go public prior to the pandemic, but lost momentum due to headwinds impacting the entire digital media landscape.
- At least one of BuzzFeed's investors, NBCUniversal, has reportedly expressed concern that BuzzFeed's target valuation for the SPAC IPO is too low.
- BuzzFeed’s previously-announced acquisition of Complex Networks for $300 million in cash and stock is expected to close on Friday, which also is when the SPAC merger becomes effective.
Between the lines: Members of BuzzFeed News' union staged a digital walkout on Thursday, ahead of the shareholder vote. The walkout caused tension between union members and management, but didn't impact the SPAC merger vote.
- A spokesperson for BuzzFeed told Axios earlier Thursday there's "a bargaining session planned for next Tuesday where we hope the union will present a response on these issues."
What's next: Digital media firms considering going public will be closely eyeing BuzzFeed's stock market debut to see how investors will respond.
