McCreath: SPAC, IPO interest wanes
Vice Media Inc., a cable and online entertainment group, is in talks to merge with a blank-check company, according to a person with knowledge of the matter, in a deal that values the business at about half what it was four years ago.
Under the proposal, Vice would combine with 7GC & Co. Holdings Inc., a special purpose acquisition company led by tech investor Jack Leeney, according to the person, who asked not to be identified because the matter is private.
Vice’s existing investors, including the private equity firm TPG and Walt Disney Co., would own 75per cent of the new company after the merger. 7GC & Co. Holdings will own other 25per cent of the company, joined by institutional investors who agree to fund the transaction following a roadshow, the person said. A definitive agreement has yet to be reached, and there’s no assurance the parties will reach one.
7GC & Co. Holdings didn’t immediately respond to a request for comment.
Vice is seeking a valuation of about US$3 billion, including debt, the person added. That’s a decline from four years ago, when Vice got a US$450 million investment from TPG that valued the company at US$5.7 billion.
Online media companies have struggled to meet lofty growth expectations, in part because digital advertising dollars have gone increasingly to tech giants like Facebook and Google. Many are cutting costs to reach profitability and diversifying to rely less on ad revenue. At the same time, the industry has started to consolidate, and digital media companies are either selling or looking to go public through a special purpose acquisition company, or SPAC, to give their longtime investors an exit.
Vice’s proposed valuation was reported earlier Monday by the Wall Street Journal, which also said the deal could liberate the company from onerous financial obligations to TPG. Vice’s talks to merge with 7GC & Co. Holdings were reported in March by The Information, which said the company’s revenue last year was US$580 million, down 4per cent from the year before.
Vice isn’t the only digital media company looking to go public through a SPAC. BuzzFeed Inc. has been in talks to go public through a merger with 890 5th Avenue Partners Inc., Bloomberg reported in March.