BuzzFeed, the digital publisher known for viral content, announced on Thursday its plan to go public through a merger with a special purpose vehicle, signaling a shift in the business strategy of the once-aspiring media start-up.

BuzzFeed said it plans to merge with a publicly traded shell company, 890 Fifth Avenue Partners, as part of a so-called SPAC deal. It will be valued at $ 1.5 billion, down from the 2016 value which was $ 1.7 billion. As part of the proposed transaction, BuzzFeed will raise $ 438 million, of which $ 150 million will be in debt financing.

BuzzFeed also announced that it will acquire Complex Networks as part of the deal for a total of $ 300 million, of which $ 200 million in cash and the remainder in stock. Best known for reporting on pop culture, the complex also hosts events related to food, sports, and sneaker-collecting.

Jonah Peretti, founder and CEO of BuzzFeed, announced the merger at a press conference at the company’s Manhattan headquarters. “This is a very exciting day for BuzzFeed and a great day for our employees and our partners,” he said.

Once considered the future of media, BuzzFeed has become an outlier in an industry that has recently rewarded subscription-driven publishing and newsletter platforms. If 890 Fifth Avenue investors vote in favor of the transaction, BuzzFeed expects to close the transaction by the end of the year and the stock will trade under the ticker symbol BZFD.

Adam Rothstein, Executive Chairman of 890 Fifth Avenue Partners and venture investor known for investing in Israeli technology startups, will join the board of BuzzFeed. The company’s board members include financial and media veterans, current and former executives from ESPN, NBC, Playboy, Martha Stewart Living Omnimedia, Subversive Capital, and the A&E cable network.

It’s unclear whether BuzzFeed’s shareholders, which include media giants like NBCUniversal, venture capitalists and a number of current and former BuzzFeed employees, will be able to cash out once the company goes public. It is not uncommon for shareholders to wait in a so-called lock-up period.

Mr Peretti’s growth strategy seems to depend on company acquisitions – partly to gain an impact on large distributors like Google and Facebook, but also because BuzzFeed has not yet reached the required size.

In 2018 he quietly looked for possible mergers with competitors such as Vice Media, Group Nine and Vox Media. In November, Mr. Peretti orchestrated the acquisition of HuffPost by BuzzFeed, the site he founded in 2005 with Arianna Huffington and investor Kenneth Lerer.

With the addition of Complex, BuzzFeed expects revenue to grow 24 percent this year to $ 521 million on pre-tax profits of approximately $ 57 million. For next year, it expects sales of $ 654 million and pre-tax profit of $ 117 million.

Daily business briefing

Updated

June 24, 2021, 1:19 p.m. ET

Still, that can’t be enough.

“We will have opportunities to pursue further acquisitions and there are more exciting companies that we want to pursue,” said Peretti during the press conference on Thursday.

When asked which companies he could buy, he replied: “I don’t know, do you have an idea?”

Born out of a small office in New York’s Chinatown in 2006 when Mr. Peretti was the Huffington Post’s chief technology officer, BuzzFeed began as an experiment in creating content to be shared on the Internet. He left what is now HuffPost in 2011 after AOL bought it for $ 315 million, and turned his project into a standalone media company with the help of $ 35 million from investors.

BuzzFeed soon became one of the fastest growing digital publishers, eventually raising $ 500 and being hailed as the future of news media. But in recent years it has missed ambitious sales targets and some of its investors have agitated to sell.

After a series of layoffs in 2019, BuzzFeed began diversifying its business, selling branded cookware, and expanding its product recommendation area, taking a commission on every sale through affiliate agreements with Amazon and other companies. “Our model has evolved,” said Mr Peretti in an interview last year.

SPAC deals, once an obscure Wall Street maneuver, have become more common over the past year. Special-purpose acquisition companies – letterbox companies that are listed on a stock exchange – are usually formed with the aim of buying a private company and getting it public.

Group Nine, a rival of BuzzFeed, took a different route. In December, she set up her own SPAC with the aim of finding a company to buy before going public.