Forbes pulls plug on plans to go public via a SPAC
Forbes is calling off its plans to go public via a merger with a blank check company, according to two people familiar with the matter. A formal announcement is expected in the near future.
Why it matters: The SPAC (special purpose acquisition company) market has cooled off significantly since Forbes first announce its SPAC IPO plans last August. Private buyers have since expressed interest in the company.
- The company officially announced Tuesday that its shareholders have terminated the business combination agreement with the SPAC.
- Forbes CEO Mike Federle noted in a statement that the company “exceeded the business forecast for 2022“ that it outlined in its initial investor deck.
Be smart: The news isn't totally surprising, given that Forbes' shareholders and Magnum Opus, the SPAC that was looking to take Forbes public, already delayed the deal termination date agreement twice in the past four months.
- Tuesday was the last day that the two parties were eligible to extend their merger termination agreement without triggering a clause that would allow either party to back out of the deal. When the paperwork wasn't filed as of Tuesday morning, it was clear the deal was on ice.
Catch up quick: 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.
- The Forbes family still owns the remaining 5% of the company. There has been tension between IWM and the Forbes family. Members of the family still sit on Forbes' board.
- IWM has been trying to cash out in recent years. Forbes held talks with private buyers about a possible sale prior to its SPAC.
- Sources told Axios that some members of Forbes' board preferred a private deal. But Forbes proceeded with a SPAC merger plan anyway, announcing plans to go public via a SPAC merger last August at an enterprise value of $630 million.
In the months that followed, there were some signs that Forbes' management had been eyeing other options as the SPAC market slid.
- 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.
- 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.