BuzzFeed agreed to go public in a deal with a blank check company that said it gave the group an implied valuation of $1.5 billion, as digital media companies rush to raise funding to better rival tech giants like Google and Facebook.
The 14-year-old company will merge with 890 Fifth Avenue Partners, a special purpose buyout company that raised $288 million earlier this year.
BuzzFeed has also agreed to buy Complex Networks, a digital publisher focused on street fashion and pop culture, from Verizon and Hearst for $200 million in cash and $100 million in equity.
Instead of the private investment in public equity financing that has become a standard for Spac deals, BuzzFeed has raised an additional $150 million through convertible bonds led by Redwood Capital Management.
BuzzFeed, known for its listings and contests, was one of a generation of digital media groups to attract billions of dollars in high ratings, being heralded as the future of media.
However, these companies have struggled to live up to expectations, leading to lower valuations and consolidation across the sector. BuzzFeed was previously valued at $1.7 billion in its 2016 fundraising round.
Jonah Peretti, the former co-founder of the Huffington Post, started the BuzzFeed website in 2006 with popular content from all over the Internet. In 2011 the company hired journalist Ben Smith to build a serious journalistic operation, and the group recently won its first Pulitzer Prize for international reporting.
Digital media companies have been looking for ways to come together in recent years as they are fight to survive In a rapidly evolving media landscape.
In the past few years, Vox has bought New York Media, the group behind New York magazine and sites including Vulture, while Vice Bought a strainer 29. BuzzFeed itself Got HuffPost From Verizon last year.
BuzzFeed could use its public listing as a way to do more deals, according to a person close to the company, who added that Peretti was keen to roll out as many digital companies as possible to increase ad volume.
The person added that BuzzFeed is unlikely to merge with Vice, as some analysts have predicted, given the difficulty of bringing together companies and strong leaders who will struggle to work together.
Peretti will continue to run BuzzFeed as a public company. Adam Rothstein, CEO of Spac, and Greg Coleman, former president of BuzzFeed and a Spac consultant, will join the company’s board of directors.
In a note to employees on Thursday, Peretti said, “We finally have the scale to influence how the larger media industry operates and help shape a better model for the future,” adding that the company was close to achieving “more than half a billion [dollars]In revenue this year.