BuzzFeed, the digital publisher known for quizzes, listicles, and a news division that won its first Pulitzer Prize this month, is about to enter into a merger agreement that would bring the company public, said a person with knowledge of the company on Wednesday.
An announcement could be made later this week, the person added. BuzzFeed declined to comment.
Under the direction of its founder and CEO Jonah Peretti, BuzzFeed has held talks about a merger with an already listed mailbox company, 890 Fifth Avenue Partners, in a so-called SPAC deal. (The acronym stands for Special Purpose Acquisition Company.)
Born out of a small office in New York’s Chinatown in 2006, BuzzFeed began as an experiment in creating content to be shared on the Internet when Mr. Peretti was the Huffington Post’s chief technology officer. He left what is now HuffPost in 2011 after AOL bought it for $ 315 million, and turned his project into a standalone media company with the help of $ 35 million from investors.
BuzzFeed soon became one of the fastest growing digital publishers, eventually raising $ 500 million on a valuation of $ 1.7 billion, and being hailed as the future of news media. But in recent years it has missed ambitious sales targets and some of its investors have agitated to sell.
After a series of layoffs in 2019, BuzzFeed began diversifying its business, selling branded cookware, and expanding its product recommendation area, taking a commission on every sale through affiliate agreements with Amazon and other companies. “Our model has evolved,” said Mr Peretti in an interview last year.
Mr Peretti, who rules the BuzzFeed board of directors despite having a minority stake, has held discussions about possible mergers with competitors such as Vice Media, Group Nine and Vox Media. The idea was to create a digital media giant that would have some impact on Facebook and Google, platforms that would continue to dominate online advertising.
In November, Mr. Peretti orchestrated the acquisition of HuffPost by BuzzFeed, the site he co-founded with Arianna Huffington and investor Kenneth Lerer. This larger version of BuzzFeed is the company that could go public as part of a SPAC deal. The anticipated listing could also include a debt sale to raise money that could be used to purchase other digital publishers.
SPAC deals, a once mysterious Wall Street maneuver, have become more common over the past year. Special purpose vehicles that are listed on a stock exchange are usually set up with the aim of buying a private company and getting it public.
Group Nine, BuzzFeed’s rival, takes a different route. In December, she set up her own SPAC with the aim of finding a company to buy before going public.
BuzzFeed expects to have pre-tax income this year on revenue of approximately $ 500 million, said the person who knows the company.