Digital Media Outfit BuzzFeed To Press On With Its Plan To Go Public Via SPAC Route Despite Poor Investor Response

U.S digital company BuzzFeed, that has gained considerable mindshare in recent years among younger audience for its cute cat videos and listicles, will go public on Monday (Dec 6) despite lack of enthusiasm among investors.

BuzzFeed opted to go public through the SPAC (special purpose acquisition company) route instead of the conventional method of initial public offering (IPO) as the former allows the listing process to compressed by as much as 75%. SPAC route also allow companies to share ambitious commentary on business model and projections on financial future that typically are prohibited in the traditional IPO process.

On Friday (Dec 3), BuzzFeed said it had finalized a merger with 890 5th Avenue Partners, a special purpose acquisition company (SPAC), which raised reportedly raised $288 million earlier this year. In June this year, 890 5th Avenue Partners announced its merger with Buzzfeed. However the company received just $16 million from the SPAC deal as sceptical investors in the withdrew 94% of their funds..

Investors in a SPAC have the option to withdraw their funds before that SPAC finalizes a merger. This protection is particularly valuable to those who invested in that SPAC before its merger target is known.

Buzzfeed also raised $150 million in debt financing as part of the deal. BuzzFeed also agreed to buy Complex Networks, a joint venture between Hearst and Verizon that caters to an audience of millennials and Gen Zers by dishing out content on sports, clothing and fashion.

Buzzfeed is going public at a time when it is facing major internal dissent from its workforce over wage settlement. A section of company's employees at the news arm staged a 24-hour walkout protesting the company’s failure to offer certain contract conditions, including a salary base of $50,000, after nearly two years of negotiations.

Founded by Jonah Peretti in 2006, Buzzfeed was initially focussed on creating viral content centered around cat themes, videos and listicles. The media platform attempted to expand its coverage by venturing in to areas like political reportage but with limited success.

In November 2020, Buzzfeed acquired Huffington Post news site from Verizon, without disclosing the amount.

Buzzfeed has projected that it sales will exceed $1 billion in 2024. It clocked a sales of $421 million in 2020 and expects to close 2021 with a a sales of $421 million.

According to Market Watch, Buzzfeed's revenue mix in 2019 included 41% coming from advertising, 11% from commerce, and 48% from content, BuzzFeed said. It has projected a mix of 44% advertising, 31% commerce, and 25% content by 2024.