Vox Media said it has agreed to acquire Group Nine Media Inc. , a deal that unites two of the biggest players in digital publishing.
Under the terms of the stock transaction, Vox Media will own 75% of the combined company, with the remaining 25% going to Group Nine Media, according to people familiar with the matter. Jim Bankoff, CEO of Vox Media, will lead the company.
The Wall Street Journal first reported on Monday that the companies are in advanced deal talks.
Vox Media, which owns media properties including tech-focused website Verge, current events website Vox.com and sports-focused SB Nation, is expanding. In August, it agreed to buy cocktail website Punch to deepen its coverage of food and beverages. Vox has explored ways to raise money for further growth, including the possibility of bringing it to the public, people familiar with the matter said.
Group Nine Media, whose brands include news outlet NowThis, lifestyle site Thrillist and animal-focused Dodo, has also been an active unifying factor in the media sector. It previously explored a deal with BuzzFeed and in 2019 bought the women’s digital media company PopSugar.
Group Nine last year formed a special purpose acquisition company to explore potential acquisitions. People familiar with the situation said the deal with Vox Media does not include SPAC.
The combined company is expected to generate more than $700 million in revenue in 2022 and more than $100 million in profit, according to people familiar with the companies’ finances, making it one of the largest players in the sector. People said the combined company grew its revenue on a pro forma basis by about 30% this year compared to last year.
“The rationale behind this merger is to increase revenue, increase volume, and bring together these incredibly strong and integrated portfolios,” Pankoff said in a note to employees. “Together we will be a stronger, more financially sustainable company that can invest more in our products and our people.”
Group Ninth Media CEO Ben Lerer will be a director on the combined company’s board of directors.
Digital media executives say the industry is poised for consolidation. Many participants believe they need more scope to effectively compete for online advertising dollars and expand further into areas such as e-commerce, events, and podcasts. BuzzFeed Inc. indicated. , which recently started trading as a public company after a deal with SPAC, indicates its interest in dealmaking. Bustle Digital Group has also explored deals with SPAC.
People close to the deal said that after the Vox Media and Group Nine merger, the combined company could be in a position to pursue additional deals. One person said that an initial public offering (IPO) might eventually be possible.
Group Nine Media and Vox Media earlier held initial talks after Group Nine announced SPAC, but those talks have been quiet, according to people familiar with the matter. People said the two companies resumed discussions in the summer and have been working on an agreement since then.
In addition to his duties on the Vox Media Board of Directors, Mr. Lerer is expected to continue to work at Lerer Hippeau as a managing partner, one person said.
write to Amol Sharma at email@example.com and Benjamin Mullin at Benjamin.Mullin@wsj.com
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It appeared in the December 14, 2021, print edition as “Vox Media, Group Nine in Talks to Merge”.