Vox Media agrees to buy Group Nine Media, creates Big Digital Publisher
Vox Media said it had agreed to buy Group Nine Media Inc., a deal that unites two of the biggest players in digital publishing.
Under the terms of the share agreement, Vox Media will have 75% ownership in the combined company, while the remaining 25% will go to Group Nine Media, according to people familiar with the matter. Vox Media CEO Jim Bankoff will lead the company.
The Wall Street Journal only reported on Monday that the companies were in advanced contract negotiations.
Vox Media, the owner of media properties, including the technology-focused website Verge, the website for current events Vox.com and sports-focused SB Nation, has expanded. In August, it was agreed to buy the cocktail website Punch to expand the coverage of food and drink. Vox has explored ways to raise money for further growth, including the possibility of going public, people familiar with the matter have said.
Group Nine Media, whose brands include the news outlet NowThis, the lifestyle site Thrillist and animal-focused Dodo, has also been an active consolidator in the media sector. It previously investigated an agreement with BuzzFeed and in 201[ads1]9 bought a female skewed digital media company PopSugar.
Last year, Group Nine formed an acquisition company with special purposes for exploring potential acquisitions. The agreement with Vox Media does not involve SPAC, said people who are familiar with the situation.
The merged company is expected to generate more than $ 700 million in revenue in 2022 and more than $ 100 million in profits, according to people familiar with the companies’ finances, making it one of the largest players in the sector. On a pro forma basis, the combined company increased turnover by around 30% this year compared to last year, the people said.
“The business rationale behind this merger is to increase revenue, increase the scale and combine these incredibly powerful and complementary portfolios,” Mr. Bankoff said in a note to employees. “Together, we want to be an even stronger, more financially sustainable company that can invest more in our products and our people.”
Group Nine Media CEO Ben Lerer will be the director of the combined company’s board.
Digital media executives say the industry is ready for consolidation. Many participants believe that they need more scale to compete effectively for online advertising dollars and expand further in areas such as e-commerce, events and podcasting. BuzzFeed Inc., which recently began trading as a public company following a deal with a SPAC, has signaled its interest in making deals. Bustle Digital Group has also explored agreements with a SPAC.
Following a merger of Vox Media and Group Nine, the combined company may be in a position to pursue further agreements, people close to the transaction said. One of the people said that a stock exchange listing could be possible eventually.
Group Nine Media and Vox Media previously had preliminary talks after Group Nine announced its SPAC, but these talks were cooled, according to people familiar with the matter. The two companies resumed discussions this summer and have been working towards an agreement since then, the people said.
In addition to his duties on Vox Media’s board, Lerer is expected to continue working in the venture firm Lerer Hippeau as managing partner, said one of the people.
Private companies are flooding into specialty acquisition companies, or SPACs, to circumvent the traditional IPO process and get a public listing. WSJ explains why some critics say investing in these so-called blank-check companies is not worth the risk. Illustration: Zoë Soriano / WSJ
Write to Amol Sharma at amol.sharma@wsj.com and Benjamin Mullin at Benjamin.Mullin@wsj.com
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Appeared in the print edition on December 14, 2021 as “Vox Media, Group Nine in Talks to Merge”.
