Group Nine’s Blank-Check Company Goes Public, Seeks to Raise $200M

Group Nine’s Blank-Check Company Goes Public, Seeks to Raise $200M

By  |  January 15, 2021  |  Uncategorized  |  No Comments

Digital media publisher Group Nine Media, whose brands include Thrillist, NowThis, the Dodo and Seeker, is readying itself for a buying spree.

After filing a special purpose acquisition company last month, the publisher began trading today. It has set out an initial public offering of 20 million units at $10 apiece, for total gross proceeds of $200 million.

Group Nine Acquisition Corp was created with the goal of “carrying out a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities.” The company will be led by chief executive officer and director Ben Lerer, who serves as the CEO of Group Nine Media. Brian Sugar, president of Group Nine Media, will be president and a director.

SPACs or blank-check companies are gaining popularity as the market—in the hope of overcoming coronavirus-induced economic downturn—is being flushed with more capital and business owners see an opportunity to roll up assets that have previously underperformed as value buys. BuzzFeed has had conversations with at least one SPAC since its acquisition of HuffPost. These shell companies are a device for listing businesses quickly, they are typically a less admin-heavy route to multiple mergers and acquisitions. In 2020, SPACs exploded with record IPOs totaling more than $86 billion, according to LUMA Partners.   

Analysts are looking at advertising in 2021 as a K-shaped recovery: digital media businesses, streaming platforms and commerce tech platforms are beating the previous quarters’ earnings. While print advertising and analogue businesses remain under pressure.   

“Good digital content businesses are still trading well, the belief is if they were managed better or consolidated with others you could create a better more profitable business,” said independent analyst Alex DeGroote. “It remains to be seen whether that’s folly or delusions of grandeur. The problem is there is a lot of capital, are there enough profitable targets?” 

What is significant about Group Nine Media’s SPAC are its heavy-hitting shareholders, giving the company access to capital and superior management. Discovery owns 25% of Group Nine. Other equity stakeholders include German media group Axel Springer and Lerer Hippeau, the venture capital firm co-founded by Ken Lerer, the father of Ben Lerer.

Even so, it’s still tough to make money from digital content businesses, especially advertising-dominant models, as browsers and regulators clamp down on targeting audiences across sites via third-party cookies.

Nonetheless, as Group Nine and BuzzFeed show, SPAC activity is growing. 

“You can expect more SPACs over the next nine months,” said DeGroote.

Group Nine also announced that former Time Warner CEO Richard Parsons and Jen Wong, Chief Operating Officer at Reddit, will join the board of directors.

About the Author: Lucinda Southern

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