890 5th Avenue to Buyout Group Nine’s Founder Shares (GNAC)
Group Nine Acquisition Corp. (NASDAQ:GNAC) announced this afternoon that it has entered into a Membership Interest Purchase Agreement with 890 5th Avenue Partners, LLC to sell certain Class A interests of the sponsor, Group Nine SPAC, LLC, which economically corresponds to 4,025,000 shares of Class B common stock, or Founder Shares. Essentially, 890 5th is buying the economic interests of the Founder Shares without triggering a “change of control”.
As for 890 5th, it previously had its own SPAC which acquired online media outlet BuzzFeed (NASDAQ:BZFD) at an enterprise value of $1.5 billion. And while 890 5th clearly has experience in the media space (the sector within which Group Nine was looking), the Buzzfeed deal was not without controversy. 890 5th and Buzzfeed completed their business combination on December 2, 2021, but saw redemptions reach 94.4%, and subsequent employee protests.
However, as part of the Membership Interest Purchase Agreement, 890 5th Avenue Partners agreed not to sell the Founder Shares until 1 year following the business combination or if the shares are trading equal to or above $12.00 at least 150 days after closing.
In summary, this let’s Group Nine out of its SPAC while also letting 890 5th, which now has SPAC experience under its belt, work on bringing back a combination. In theory, 890 5th is far better armed for this go around having dealt with a difficult combination with Buzzfeed. Hopefully that experience translates into a great combination for Group Nine Acquisition Corp, and in the end, that’s all shareholders really want.