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Buzzfeed (BZFD) gets rug pulled by SPAC IPO share redemption

By Kevin Donovan

15:53, 3 December 2021

Buzzfeed office
94% of ENFA shareholders opt out of IPO – Photo: Shutterstock

While investors in the blank-cheque firm merging with Buzzfeed approved the business combination late Thursday, 94% of them decided to redeem their shares at $10 per share rather than stay invested in the combined entity.

SPAC 890 5th Avenue Partners stock fell as much as 14% when US trading began  Friday to as low as $8.50 per share, versus Thursday’s $9.91 closing share price. Eighth Avenue Partners trades over the Nasdaq exchange under the ticker “ENFA”.

Just under 80% of 809 5th Avenue Partners shareholders voted, with 98.2% of voting shareholders approving the merger. Of that total, however, just 6% opted to invest in the combined entity, according to records filed with the US Securities & Exchange Commission.

As a result, when factoring in the $150m in convertible private investment in public equity (PIPE) notes, Buzzfeed raised $166.0m in proceeds, instead of the $437.5m it expected.

Merger closing Friday

The merger closes Friday and Buzzfeed is scheduled to begin trading Monday on the Nasdaq exchange under the ticker “BZFD”. At the $9.91 per share price of SPAC 890 5th Avenue Partners at the time of the vote, the new company is valued at roughly $1.5bn.

The PIPE financing comes from a June funding round led by Redwood Capital Management for $250m. The funding round included CrossingBridge Advisors, Cohanzick Management and Silver Rock Financial, Buzzfeed previously announced.

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Long position overnight fee -0.0263%
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Acquiring Complex Networks

Buzzfeed’s planned acquisition of Complex Networks from Verizon Communications, including The Huffington Post and Tasty, also closes Friday. The Complex acquisition is funded by a combination of cash and equity totalling $300m.

Buzzfeed reported a $15.7m net loss for the nine months ended 30 September on revenue of $251.8m. Revenue grew 27% year over year during the period. The net loss narrowed 25% from $21.1m in the prior period.

Union negotiations

The merger comes amid labour strife, as Buzzfeed is in contentious negotiations with the Buzzfeed News Union, a member of NewsGuild New York. Buzzfeed News staff unionised in February 2019 and have been in collective bargaining negotiations since.

“We've been bargaining our contract for almost 2 years, but BuzzFeed won't budge on critical issues like wages — all while preparing to go public and make executives even richer,” the Buzzfeed News Union said Thursday in a statement. “So (Thursday), we're walking out to send a reminder that there's no BuzzFeed News without us.”

Buzzfeed Union bulletinBuzzfeed News Union Walk Out

Read more: BuzzFeed plans job cuts reorganisation after revenue miss

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
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