Scoop: Private investors plot Forbes buyout
Investment firm GSV is working on a bid to buy Forbes Media at a $620 million valuation as an alternative to Forbes' announced SPAC merger, Axios has learned.
Why it matters: BuzzFeed's public listing last week added to growing skepticism about the SPAC market for media companies. Its shares are down roughly 40% from its opening price, and 94% of investors redeemed their stock following the merger news.
- Forbes previously announced plans to go public via a SPAC merger that was set to close in Q4 of this year or Q1 2022.
- "We are moving full steam ahead with SPAC transaction," Forbes Media chief communications officer Bill Hankes told Axios. "We remain on schedule to close the transaction in the first quarter."
- The blank check company that Forbes is expected to merge with, Magnum Opus Acquisition, is sponsored by Hong Kong-based investment firm L2 Capital.
Details: The bid is led by GSV Asset Management CEO Michael Moe, with participation from "top family offices and institutional investors," according to a pitch a participating investor is circulating to others and seen by Axios.
- The deal would value Forbes at $620 million, slightly less than the $630 million valuation Forbes would get via its merger with Magnum Opus.
- According to the pitch, the first tranche is set to close on Dec. 31, and the second in March 2022.
Between the lines: Forbes had been pursuing a private sale prior to its decision to merge with a SPAC. It's unclear whether Forbes will pivot to the private sale.
- Forbes Media communications chief Bill Hankes declined to comment when asked whether the company is in communication with GSV about a potential deal.
- Sources told Axios earlier this year that some of the Forbes top brass preferred some of the private offers it received prior to the SPAC announcement, most notably an effort by GSV.
- Other companies, like blockchain software firm Block.one, had also expressed interest, as Axios previously reported. (Forbes experimented with blockchain briefly in 2018.)
- Moe declined to comment to Axios.
Be smart: The SPAC merger is structured so that Forbes’ majority owner Yam Tak Cheung — also known as TC Yam — could take out a roughly $400 million secondary round from funds secured via the acquisition.
- But its merger presentation notes that any redemptions from investors will impact the amount of secondary proceeds he or other shareholders will receive. There's been an uptick in redemptions (and even merger cancellations) since the summer.
- The SPAC Forbes is set to merge with had already secured additional $400 million in institutional investments via a PIPE to supplement the available cash.
Catch up quick: Forbes, which launched in 1917, was family owned until 2014, when the Forbes family sold a 95% stake to Chinese investment group called Integrated Whale Media. The deal reportedly valued Forbes at $475 million.
- The Forbes family later sued Integrated Whale Media for missing an interest payment from money it borrowed from the Forbes family to finance part of the deal and eventually defaulting on the loan. The two parties reportedly settled the dispute in 2017.
- Reports over the past few years have suggested that Yam was looking to offload the property for some time.
- The Forbes brand has a lot of cachet with investors and corporate executives.
The bottom line: Sources have told Axios that the dynamic between Yam and Steve Forbes, the media company's chairman and former CEO, has been on shaky ground for years and that there's been friction between the two when it comes to deals.