Forbes SPAC deal on ice
The blank check company that's looking to take Forbes public has until end of business today (May 31) to file paperwork with the SEC to close its merger.
Why it matters: If no paperwork is filed, either party can walk away from the deal. Given the current state of the SPAC market, that looks likely.
- Magnum Opus, the SPAC that’s looking to merge with Forbes to take it public, has filed two deadline extensions so far this year. In both cases, the paperwork was filed several days prior to the deadline.
Be smart: With less than a full business day left, it would be surprising for Magnum Opus to file for an extension yet again.
- If it does file for a third extension, it’s still a grim sign for a deal that was meant to close in Q1.
- The deal can technically get extended any number of times until March 25, 2023, when the SPAC automatically terminates.
Next steps: If Forbes' SPAC doesn't go through, the company could try to sell itself to a private buyer.
- Forbes is mostly owned by Integrated Whale Media (IWM), a Hong Kong-based investment firm that bought a 95% stake in the company from the Forbes family in 2014.
- IWM has been trying to cash out on its investment for a while. Axios reported that Forbes has held talks with private buyers for years prior to its SPAC deal, including blockchain software firm Block.one and more recently, GSV Ventures, an investment firm.
- The SPAC deal was structured so that IWM — and to a small extent, the Forbes family, which still owns 5% of the company — would receive a $400 million payment when the SPAC merger was complete.
Between the lines: There have been some signs that Forbes' management has been eyeing other options as the SPAC market skids.
- In December, Axios reported that despite the company's stated plans, a private investment firm was working on a private buyout bid for Forbes at a $620 million valuation. (Forbes first said it planned to go public via a SPAC merger last August at an enterprise value of $630 million.)
- In February, Forbes received a $200 million investment from Binance, one of the world's largest cryptocurrency exchanges. The deal made Binance Forbes' second-largest shareholder, following IWM.
- Binance's investment would replace half of the $400 million initially raised by institutional investors to help finance Forbes' SPAC, which would essentially help IWM partially exit from its Forbes investment.
The big picture: Once considered one of the most prestigious business media brands in the world, Forbes has found itself in a precarious position for the last decade as it wrestles with its ownership drama.
- Strategically, the company did well in 2021, per its last financial update in February. Forbes grew revenues by 40% year-over-year in 2021 to $259 million, and it grew profit by 86% year-over-year to $60 million.
- But like many legacy print outlets, Forbes' brand has been marred by efforts to scale quickly in the digital era.
What to watch: In the past, Forbes has reiterated its commitment to its SPAC deal, but it did not comment in response to this story.