Investors in BuzzFeed SPAC Reportedly Pull Out Ahead of Much-Anticipated IPO
News publisher BuzzFeed, which had announced plans to go public in June via a special-purpose acquisition company, is now having difficulty receiving funding for the deal, the Wall Street Journal reported.
The deal that valued BuzzFeed at $1.5 billion was originally expected to close in the fourth quarter of 2021.
The online media outlet is reportedly having trouble raising funds as investors may have pulled out “the bulk of their money,” the Journal reported.
“The company is now expected to receive only a fraction of the $287.5 million held by the SPAC,” the Journal reported citing people familiar with the development.
Buzzfeed had originally touted 890 5th Avenue Partners for committing $288 million in a cash trust to the IPO.
890 5th Avenue Partners is led by Executive Chairman Adam Rothstein and CEO Emiliano Calemzuk. Rothstein was to join BuzzFeed’s board when the deal was first announced.
The company did not return a request for comment from TheStreet.
The Journal’s report did not share exact details of how many investors may have backed out from the deal or shared names, nor how much each investor might now be contributing.
BuzzFeed had said in June 2021 that investors led by Redwood Capital Management, including CrossingBridge Advisors, Cohanzick Management and Silver Rock Financial were contributing $150 million in convertible-note financing to support the deal.
As part of the deal. BuzzFeed Founder Jonah Peretti had agreed to acquire Complex Networks from Hearst and Verizon Communications (VZ) – Get Verizon Communications Inc. Report for $300 million, structured as $200 million in cash and $100 million in BuzzFeed equity.
“With today’s announcement, we’re taking the next step in BuzzFeed’s evolution, bringing capital and additional experience to our business,” BuzzFeed Chief Executive Officer Peretti said in a statement at the time.
SPACs are formed for the express purpose of finding and merging with an operating partner. The idea is to speed the operating company to the public markets and avoid the extended process of a traditional initial public offering.
BuzzFeed acquired telecom giant Verizon Media’s digital media brand HuffPost in a stock deal in November last year.
