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BuzzFeed Valued at $1.5 Billion in SPAC Deal to Go Public, Will Acquire Complex Networks for $300 Million

Jonah Peretti, BuzzFeed Founder and CEO
Jonah Peretti, BuzzFeed founder and CEO.

BuzzFeed is going public in a deal with a special purpose acquisition company (SPAC), which will give the digital media company an implied valuation of $1.5 billion once the pact closes, the company announced.

BuzzFeed will become a publicly traded company through a merger with 890 Fifth Avenue Partners, a SPAC that holds $288 million in cash in its trust account after an IPO earlier this year. In addition, BuzzFeed secured $150 million in financing led by Redwood Capital Management and including CrossingBridge Advisors, Cohanzick Management and Silver Rock Financial.

As part of the SPAC transaction, BuzzFeed plans to acquire Complex Networks, a global youth content network targeting millennials and Gen Z jointly owned by Verizon and Hearst, for $300 million. The price tag will comprise $200 million in cash and $100 million of equity in BuzzFeed. The Complex Networks deal will be completed simultaneously with the closing of BuzzFeed’s merger with 890 Fifth Avenue Partners.

In a memo to staff, BuzzFeed founder and CEO Jonah Peretti said the company is projecting more than $500 million in revenue for 2021 with the addition of Complex. With that run rate, “we finally have the scale to influence how the larger media industry works and help shape a better model for the future,” he wrote.

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BuzzFeed and its SPAC partners anticipate more M&A for the company. “We’re building a platform for future acquisitions, with the goal of bringing together the very best digital media offerings,” Peretti told staffers. “As a public company, we’ll have even more opportunity and public stock as a currency to help us pursue attractive acquisitions.”

Specifically, BuzzFeed is targeting $521 million in 2021 revenue (50% from ads, 32% from content, and 18% from commerce) inclusive of Complex Networks, according to its investor slide deck. In 2020, BuzzFeed and Complex on a pro-forma basis had $421 million in revenue down from $425 million the year prior. The company expects pro-forma EBITDA of $57 million this year, up from $17 million last year and -$14 million in 2019.

Complex will add a projected $119 million to BuzzFeed’s topline in 2021; last year, Complex had $100 million in sales, according to BuzzFeed’s financial deck. Complex had -$14 million in adjusted EBIDTA last year, swinging to a projected $2 million for 2021.

As a public company, BuzzFeed expects to report “positive net earnings” and projected a compound annual growth rate of 26% for revenue through 2024 “with growing EBITDA [earnings before interest, taxes, depreciation and amortization] margin,” the company said. On a pro-forma basis, BuzzFeed together with recently acquired news and opinion site HuffPost and Complex Networks, would have an aggregate audience that spends 806 million minutes per month — among Gen Z and millennials — across the properties, BuzzFeed said, citing Comscore data for October 2020.

SPACs have become an increasingly popular way for private companies to raise financing and go public — without having to undertake the more time-consuming traditional IPO route, which also carries additional disclosure requirements. Group Nine Media, the digital media rollup whose backers include Discovery, formed a SPAC that went public earlier this year.

BuzzFeed said the SPAC merger is expected to close in the fourth quarter of 2021. The parent company will be known as “BuzzFeed Inc.” and trade its shares of common stock on a public exchange under the ticker symbol “BZFD.”

BuzzFeed’s management team will remain in place, with Peretti and CFO Felicia DellaFortuna continuing in their roles alongside other executive team members. In addition, Adam Rothstein, executive chairman of 890 Fifth Avenue Partners, and Greg Coleman, an adviser to the SPAC (and former BuzzFeed president) will join BuzzFeed’s board of directors. Two additional board members will also be announced in the coming months.

BuzzFeed’s portfolio by the end of 2021 is set to comprise BuzzFeed Entertainment, the company’s flagship brand geared around quizzes, lists and more; Complex Networks, led by founder and CEO Rich Antoniello, encompasses streetwear and fashion, food, music and pop culture; BuzzFeed News and HuffPost; and Tasty Lifestyle Brands, encompassing a food network and other lifestyle brands.

The company’s BuzzFeed Commerce group handles affiliate business, strategic partnerships, licensing and product development, and BuzzFeed Studios produces original programming for broadcast and cable TV, subscription streaming, film and digital platforms.

“BuzzFeed is now the undeniable leader for the next generation of media,” Peretti said in a statement. “We’ve built a slate of essential brands, loved by the most diverse, engaged, and loyal audience on the internet. With today’s announcement, we’re taking the next step in BuzzFeed’s evolution, bringing capital and additional experience to our business. I am thrilled to have Adam [Rothstein] join our team as we work towards becoming the world’s preeminent digital media company.”

In its investor presentation, BuzzFeed identified competitors including Vox Media, Group Nine and Vice Media Group. In its “comparable company benchmarking analysis,” it compares BuzzFeed’s projected financial performance against Zynga, Etsy, Taboola, IAC and the New York Times (categorized as digital media, content and commerce) and Facebook, Snap, Twitter and Pinterest (social media).