Forbes, the wealth-obsessed business publication, has decided to cancel a deal to go public through a special purpose acquisition company, also known as SPAC, amid a cooling of investor appetite for the once-popular financial instrument, two people with knowledge of the plans said.
The cancellation could be announced this week, one of the people said.
The deal, announced in August, would have taken the company public at a $630 million valuation through a merger with Magnum Opus Acquisition, a Hong Kong-based SPAC. In February, Forbes said it had agreed to a $200 million investment from Binance, a cryptocurrency exchange, as part of the deal.
SPACs, also known as blank check companies, are publicly traded shell companies that raise money for the express purpose of taking a private company public. Investor enthusiasm around blank check companies peaked early last year, but fizzled out after several SPACs failed to deliver on their promises to investors.
Regulators, including Securities and Exchange Commission Chairman Gary Gensler, have increased scrutiny of SPACs, and the shares of many companies that went public via blank check signings have plummeted.
Forbes was one of several media companies hoping to tap into the SPAC market to help fuel growth. But not all went through with the deals, and some ran into problems.
Axios previously reported that the outlook for the Forbes SPAC deal looked bleak.
Shares of BuzzFeed, which went public through a SPAC deal in December, have fallen more than 50 percent. Vice’s efforts to go public through a SPAC stumbled as investors turned to the market, and the media company instead sought to raise more money from private investors. There is also concern in the media industry about the state of the ad market, especially after Snap, the owner of Snapchat, said last week that its revenue and earnings would be lower than expected this quarter.
Some SPACs are still seeking media deals. Executives from Group Nine Media, a publisher that was recently sold to Vox Media, started their own blank check company last year with the aim of consolidating the digital media sector.
Forbes has posted positive financial results since agreeing to go public with Magnum Opus, a sign that the canceled deal could be a reflection of the sour market for SPACs. In February, Forbes said it generated $94 million in revenue in the fourth quarter of last year, a 51 percent increase from a year earlier. It made $18 million in profit for the quarter, an 80 percent increase from a year earlier.
Founded as a magazine in 1917, Forbes is known for its rankings of wealthy businessmen. Last year, Forbes said it reached more than 150 million people with its journalism, events and marketing programs. The Forbes family sold a majority stake in the company to Integrated Whale Media Investments in 2014.
Forbes still publishes a print edition eight times a year in the United States and has 45 licensed local versions covering 76 countries.