Shareholders of 890 Fifth Avenue Partners, a special purpose acquisition company, approved a merger with BuzzFeed on Thursday. BuzzFeed will also close its acquisition of Complex Networks, a media company run as a joint venture of Verizon (VZ) and Hearst, on Friday. The newly combined companies will start trading Monday under the ticker BZFD.
BuzzFeed raised about $16 million from the SPAC deal, which is far less than anticipated. When BuzzFeed announced its plan to go public in June, it said 890 Fifth Avenue Partners held about $288 million in cash. But the vast majority of investors withdrew, as The Wall Street Journal reported earlier on Thursday. BuzzFeed also raised about $150 million in debt financing for a total expected raise of approximately $166 million.
Over the past 15 years, BuzzFeed has grown from a website best known for its viral content to a digital media company with a portfolio of brands and an award-winning news division. Last year, BuzzFeed inked a deal with Verizon to acquire HuffPost, the digital media brand Jonah Peretti had co-founded the year before he launched BuzzFeed. In June, BuzzFeed News received a Pulitzer Prize.
But even before the decision was finalized, a key tension in the industry was on full display earlier in the day: In preparation for the vote that will take the company public, some of its staff members staged a walkout to call attention to ongoing issues regarding bargaining for their union contract
“We’ve been bargaining our contract for almost 2 years, but BuzzFeed won’t budge on critical issues like wages — all while preparing to go public and make executives even richer,” the union tweeted
. “[W]e’re walking out to send a reminder that there’s no BuzzFeed News without us.”
BuzzFeed had been heralded for its ability to attract younger audiences, covering trending news in an accessible and engaging way. It gained the interest of legacy media outlets including NBCUniversal, which invested $200 million in BuzzFeed at a valuation of $1.7 billion in 2016.
But BuzzFeed later struggled to meet the demands that came along with its high valuation as it competed with other media companies along with tech platforms such as Google (GOOG) and Facebook (FB) for advertising dollars. Facebook also implemented News Feed algorithm changes that cut audience traffic for many publishers, including BuzzFeed.
“There was a period of exuberance and hype around digital media, and that hype cycle allowed a lot of capital to flow into the space,” Peretti told Recode in June. “And then there was a period where there was a lot more skepticism, and a demand to build a real business. And now we’ve built a real business.”
Indeed, BuzzFeed and its fellow digital media companies of the 2000s have grown up — or, in some cases, blown up. Some found their exit through mergers or acquisitions with other media companies. Mashable sold to Ziff Davis. Bustle, now BDG, bought Mic. Vice Media acquired Refinery29. PopSugar joined Group Nine Media. Vox Media merged with New York Media.
Now the executives of these media companies have their eyes on BuzzFeed’s stock market debut as they consider their own SPAC deals. Vice co-founder Shane Smith told Insider last month that his company’s board of directors and management team paused its previous SPAC plans but that could change.
“If the timing comes along and we’re planning blistering 2022 and traffic and events do what we think they’re going to do, then the sky’s the limit,” Smith said.
Correction: Due to an editing error, a previous version of this story mischaracterized the size of the staff walkout.