Vox Media announced that it has signed an agreement to acquire Group Nine Media, creating one of the industry’s largest pure-play digital media players.
Terms of the deal were not disclosed. The all-stock deal is expected to give Vox Media a 75% ownership stake in the combined company, which will be run by Vox Media CEO Jim Bankoff (who also will be chairman). The companies said the merger is expected to close in early 2022 subject to customary closing conditions and regulatory approvals.
The deal will create a company with about 2,000 employees, combining the likes of Vox Media’s New York magazine, SB Nation and The Verge with Group Nine’s PopSugar, Thrillist, The Dodo and NowThis.
The business rationale behind the merger is scale both businesses in a bid to make the new Vox Media-Group Nine a “more financially sustainable company,” Bankoff wrote in a memo to staff Monday.
Under the terms of the deal, Group Nine founder and CEO Ben Lerer will join the board of Vox Media and “maintain a presence at the company to help drive key strategic initiatives and advise on commercial and corporate development,” according to the companies’ announcement.
“With this acquisition, Vox Media will extend its leadership into new categories, formats and distribution platforms by welcoming more beloved properties into our portfolio,” Bankoff said in a statement. “Our combined company will be the premier home for creators, storytellers, journalists, product innovators and businesspeople who want to grow their careers and have an impact through their work.”
In 2019, Vox Media acquired New York Media, publisher of New York Magazine, in an all-stock deal designed to gain synergies of scale. The company’s brands currently include Vox, New York Magazine, The Verge, The Cut, Eater, Vulture, Polygon, Curbed, Grub Street, SB Nation, Intelligencer and Recode.
Vox Media has made four other acquisitions this year: Cafe Studios, Preet Bharara’s podcast-centered media company; Punch, a media brand covering drinks and cocktail culture; Hot Pod, a publication covering the podcast industry; and narrative podcast studio Criminal Productions.
Meanwhile, Group Nine was formed as a roll-up play in 2016, with backers that included Discovery, combining digital media sites Thrillist, The Dodo, NowThis and Seeker; Group Nine subsequently bought comedy studio JASH and women-focused lifestyle brand PopSugar. The company is headed by Ben Lerer, founder of Thrillist and son of venture-capital investor Ken Lerer.
“We could not be more excited about the opportunity to join forces with Vox Media,” Ben Lerer said in a statement. “This combination will not only create unparalleled scale and revenue diversification, it will bring together some of the most popular brands, premium content, and creative and business talent in the world. There is no one I would trust more to lead this company and the team I love than Jim. He is not only kind and fair, but fearless and focused. This is the beginning of our most exciting chapter.”
The combined company is projected to generate more than $700 million in revenue in 2022 and more than $100 million in profit, per the Journal report.
Earlier this year, Group Nine established a special purpose acquisition company (SPAC) that raised $200 million, looking to acquire other digital media companies. However, the SPAC is not part of the merger deal with Vox Media, the companies said.
A team from Vox Media and Group Nine will “begin developing a thoughtful plan to integrate functions where it makes sense to do so,” Bankoff wrote in a memo to staff sent earlier Monday, after the Wall Street Journal first reported news that the companies were in advanced merger talks. “None of our existing editorial offerings or services will change as a result of this combination and we will be thoughtful about how we make decisions and treat people.”
Bankoff also said that “we have no immediate plans to go public, although we’ll always continue to evaluate opportunities that are in the best interest of all of our stakeholders, including our employees.”
Separately, BuzzFeed went public last week through a SPAC merger, but has had a disappointing debut as a public company: Shares have dropped 35% since they began trading Dec. 6 on Nasdaq.
In the deal to buy Group Nine, LionTree acted as financial adviser to Vox Media while White & Case acted as its outside legal adviser. Code Advisors is serving as Group Nine’s financial adviser, while Latham & Watkins is serving as its legal adviser.