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June 1, 2022updated 30 Sep 2022 11:23am

Forbes officially cancels plan to go public amid ‘deteriorating SPAC market’

By Bron Maher

Forbes has formally ended its plan to go public through a merger with a special-purpose acquisition company (SPAC).

The business news publisher attributed the move to the bad fortunes of the SPAC market, hinting the deal may not have done credit to Forbes’ underlying value. The company may now explore bids from private buyers.

It marks another inauspicious result for media businesses seeking to use SPACs to raise capital. Buzzfeed entered the public market through a SPAC deal last year and has struggled on the stock market

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Forbes’ plan, first announced in August, would have seen the business merge with the New York Stock Exchange-listed SPAC Magnum Opus Acquisition Limited.

Faster and cheaper than a traditional initial public offering (IPO), SPACs were the vehicle used to float several prominent tech-adjacent companies, including Wework, used car company Cazoo and digital advertising distributor Taboola. But withering interest from investors has seen the number and size of such deals fall sharply.

Until February, Forbes was 95% owned by Hong Kong-based Integrated Whale Media, which bought all but the final 5% from the Forbes family in 2014. In February cryptocurrency exchange Binance bought a $200m (£160m) stake in the company.

Axios reported on Tuesday that the deal termination date for Forbes and Magnum Opus had been extended twice in the prior four months. Tuesday was the last day the two companies could ask for another extension.

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Forbes confirmed the cancellation in a press release on Wednesday.

Asked by Press Gazette why the deal never materialised, a Forbes spokesperson said: “the deteriorating SPAC market.”

In the statement announcing the termination, Forbes chief executive Mike Federle said: “Our digital transformation has delivered double-digit revenue and EBITDA growth over the past year, which not only significantly outperformed the financial targets provided at the start of the SPAC transaction last year but continues to deliver high quality cashflows”.

[Read more: Forbes CEO Mike Federle interview: Why the business brand is now worth $630m]

According to Axios, Integrated Whale Media “has been trying to cash out” of Forbes in recent years, with several members of the latter’s board preferring a private deal.

The Financial Times reported in November 2021 that in March that year, SPACs had issued shares worth more than $35bn (£28bn). By the time Forbes announced its hope to go public via SPAC in August, that figure stood closer to $5bn (£4bn).

Buzzfeed’s merger in December 2021 with 890 5th Avenue Partners may have quashed remaining SPAC optimism at Forbes. Despite high hopes, the newly-minted BZFD ticker raised $16m (£13m) – some way short of the expected $250m (£200m).

Like Forbes, Vice Media dropped plans to go public through a SPAC in August 2021, after hopes for a $3bn valuation sputtered.

Picture: Shutterstock/Daniel Constante

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