Group Nine formed a special purpose acquisition company (SPAC), a type of “blank check” shell company, with plans to launch as a publicly traded entity and combine with “another target business” in the digital-media space, according to a registration statement filed Monday (Dec. 21) with the SEC. A SPAC is a kind of holding company formed for the purpose of raising capital through an initial public offering for an acquisition, merger or other business combination.
New York-based Group Nine was formed in 2016 with a $100 million investment from Discovery, combining three startups backed by venture-capital firm Lerer Hippeau — Thrillist, NowThis Media and the Dodo — with Seeker (formerly Discovery Digital Networks). The company acquired comedy studio JASH in 2017 and last year bought women’s lifestyle brand PopSugar.
Group Nine’s properties reach 44% of the U.S. population each month and generate nearly 7 billion video views monthly, according to the filing.
According the filing, Group Nine has “not selected any specific target business and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any target business regarding a business combination with our company.”
Group Nine said it is targeting the acquisition or merger with a company in the social media, e-commerce, events, and digital publishing and marketing sectors.
“We believe the digital media sector is primed for consolidation, as digital media companies need a scaled platform with efficient portfolio infrastructure to compete in the ecosystem and return value to shareholders in the long-term,” the Group Nine SPAC filing says.
Discovery owns 25% of Group Nine, with other equity stakeholders including German publishing firm Axel Springer and Lerer Hippeau. Group Nine is headed by chairman and CEO Ben Lerer, who’s also a managing director at Lerer Hippeau (co-founded by his father, Ken Lerer).
Group Nine proposed an IPO price of $10 per share (estimated for the purposes of the registration fee), and plans to offer 20 million shares (or 23 million if the underwriters’ over-allotment option is exercised). If the proposed offering yields $200 million, Group Nine would receive $189 million net proceeds after underwriting discounts and commissions.
Following the public offering, Group Nine SPAC LLC would own an estimated 20% of outstanding shares. The company has proposed to be listed on the Nasdaq exchange under the symbol “GNAC.” The proposed transaction is being underwritten by Barclays Capital and Code Advisors.
The Group Nine SPAC doesn’t currently have any operating businesses, so it didn’t report any operating results in the S-1 registration statement. It currently has a working-capital deficit of $161.3 million, total assets of $210 million and total liabilities of $186.3 million, per the filing.
The Group Nine SPAC is an “emerging growth company, so it’s eligible under the 2012 JOBS Act to take advantage of “certain exemptions from various reporting requirements that are applicable to other public companies,” according to the filing. Those include “reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements.”