Forbes Media is reportedly set to become the latest media company to go public through a merger with a special-purpose acquisition company.
Forbes is in talks with the Hong Kong-based blank-cheque company Magnum Opus Acquisition that is sponsored by a private investment firm L2 Capital, reported Bloomberg. The deal would value the company at over $650 million.
However, in May, there were reports that Forbes has entered into talks to be acquired by a group led by Michael Moe’s GSV Asset Management. That deal was expected to value the company at more than $600m.
In 2014, Hong Kong-based Integrated Whale Media Investments acquired a majority stake in Forbes in a deal that valued the news publisher at $475m. Its Boston-based founding family retained a minority stake of only 5 per cent following that transaction.
Magnum Opus raised $200m in an initial public offering in March. It said it aims to look for global consumer, technology or media firms “with disruptive growth potential through the use of technology that can benefit from operations in Asia”.
Blank-cheque companies, also known as SPACs, are companies with no commercial operations and trade without business fundamentals. They are formed with the intention of raising funds through an IPO and seek to acquire existing companies.
Merging with a SPAC means less volatility for a company than a conventional IPO and allows it to negotiate and lock in a price with the SPAC sponsor, which reduces uncertainty. SPAC mergers have lower transaction fees, a faster timeline than traditional IPOs and provide companies with access to capital when liquidity might be limited due to market volatility or other conditions.
Although SPACs have been around for a long time, they have become popular in recent years, attracting high-profile investors and raising more than $83 billion last year alone, according to Bloomberg data.
In June, online media outlet BuzzFeed agreed to go public through a merger with 890 5th Avenue Partners, as part of plans to consolidate with other digital media players.