Vox Media to acquire Group Nine Media

Vox Media, which houses sites like Vox.com, Eater and SB Nation, has signed a deal to acquire Group Nine Media, the digital company home to brands like NowThis, The Dodo, PopSugar, Thrillist and Seeker, the company said Monday.

Why it matters: The merger will create a digital media behemoth. Both companies have acquired major digital franchises in the past year to bolster their scale ahead of the combination.

• Group Nine Media acquired POPSUGAR Inc. in October 2019 for $300 million.
• Vox Media acquired New York Media in 2019 for roughly $125 million. It acquired Cafe Studios, a podcast company, earlier this year, in addition to several smaller deals, like the acquisition of the cocktail brand Punch in August.

Details: Vox Media co-founder and CEO Jim Bankoff will be the CEO and chair of the new combined company.

• Group Nine founder and CEO Ben Lerer will join the board of Vox Media "and maintain a presence at the company to help drive key strategic initiatives and advise on commercial and corporate development," per a statement.

In a memo to staff sent earlier Monday, Vox Media CEO Jim Bankoff said the business rationale behind the merger is "to grow revenue, increase scale, and combine these incredibly powerful and complementary portfolios."

• "Together we will be an even stronger, more financially sustainable company that can invest more in our products and our people," he noted. Bankoff noted that none of the companies editorial brands would change.
• A team from both companies "will begin developing a thoughtful plan to integrate functions where it makes sense to do so," Bankoff wrote.  
• The deal was first reported by The Wall Street Journal, which noted that Vox Media shareholders would own 75% of the combined company.
• LionTree acted as financial advisor to Vox Media and White & Case LLP acted as its outside legal advisor, per a statement. Code Advisors is serving as Group Nine's financial advisor and Latham & Watkins is serving as its legal advisor.

Be smart: Group Nine Media announced that it had formed its own SPAC last year, and that the SPAC could be used as a vehicle to take another company public with it.

• As Axios has previously noted, the company has until January 2023 to identify a company that it would take public with it.
• In his note to staff Monday, Bankoff said, "[W]e have no immediate plans to go public, although we’ll always continue to evaluate opportunities that are in the best interest of all of our stakeholders, including our employees."

• In the official deal announcement the company noted, that the deal is "outside of the Group Nine SPAC (Group Nine Acquisition Corp.), which is a completely separate entity."
• Axios reported earlier this year that Lerer told staff in a company-wide meeting that the company expects to be profitable this year and will bring in an estimated $200 million in revenue.

The big picture: The deal follows an intense period of consolidation in the digital media space, as digital giants vie to compete with internet giants like Google and Facebook.

• BuzzFeed acquired Complex last week when it became the first digital media company in the modern era to go public via a SPAC. Early trading has shown that investors are somewhat skeptical of how the digital media company will fair on a public market.
• IAC's Dotdash acquired Meredith last month in a $2.7 billion deal.
• Penske Media acquired the brands from Hollywood entertainment company MRC via a joint venture deal last year.
• BDG Media (formerly Bustle Digital Group) intends to go public via a SPAC next year.
• Forbes announced a deal to go public via a SPAC earlier this year.

What's next: The deal expected to close in early 2022, pending regulatory approval.