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BuzzFeed could fetch lesser capital through merger with blank-check firm

by Mike Robinson

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© Reuters. FILEPHOTO: Buzzfeed workers work in New York at its headquarters on January 9, 2014. REUTERS/Brendan McDermid

(Reuters) – BuzzFeed Inc could fetch lesser-than-expected capital through its $1.5 billion merger with a special purpose acquisition company (SPAC), the Wall Street Journal reported https://www.wsj.com/articles/buzzfeed-suffers-wave-of-spac-investor-withdrawals-before-going-public-11638472756?mod=latest_headlines on Thursday, citing people familiar with the matter.

SPAC890 Fifth Avenue Partners was named after the fictional Avengers home. It raised $287.5 millions in its IPO this January.

The report stated that a large number of SPAC shareholders are now redeeming their shares. Accordingly to this report, only about $287.5 million will be available for the SPAC account.

BuzzFeed or 890 Fifth didn’t immediately reply to Reuters requests for comment.

BuzzFeed’s valuation was $1.5billion, and the deal included a $150m convertible note financing by Redwood Capital Management.

The typical SPAC sells its shares for $10 per share, then puts the money in trust accounts and searches for companies to purchase. The shareholders have the option to cash out their shares or redeem them.

This year has seen a slowdown in the SPAC market due to tighter accounting guidance and closer inspection by U.S. Securities and Exchange Commission.

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