Major cryptocurrency exchange Binance will make a $200 million investment in Forbes, the media company said on Thursday, as it prepares to go public via a special purpose acquisition company (SPAC).
The investment by Binance, the world's biggest cryptocurrency exchange by trading volumes, will replace half of the $400 million in private placement commitments already announced by Forbes and SPAC company Magnum Opus Acquisition Limited.
The deal is expected to close by the end of March, Forbes and Magnum Opus said in a statement.
Forbes said in August that it would go public via a SPAC in an attempt to build on its digital transition and pursue further chances for growth.
"The transactions with Magnum Opus and Binance are expected to help Forbes maximize its brand and enterprise values," the companies said.
Binance will help advise Forbes on its digital asset and "Web3" strategy, they added, referring to a still-unrealised version of the internet where blockchain-based "decentralised" apps and cryptocurrencies are widely used.
SPACs are shell companies that raise money in an initial public offering (IPO) and put it in a trust for the purpose of merging with a private company and taking it public.
In February last year, Binance dropped a lawsuit against Forbes. It had in 2020 sued Forbes and two of its journalists for defamation over an October story the magazine published regarding the exchange's corporate structure.
Two senior Binance executives - Chief Communications Officer Patrick Hillman and Bill Chin, the head of its venture capital arm - will join Forbes's board of directors on the closing of the deal, the statement said.
"I can confirm Forbes's editorial independence will remain sacrosanct, and entirely independent from Binance," Binance spokesperson Simon Matthews told Reuters.
On Thursday, Binance CEO Changpeng Zhao tweeted a CNBC story on the deal to his 5.1 million followers. He later posted a thumbs-up emoji in reply to a post that said "need to set the right narrative discarding the fake news".
Investors have grown skeptical of SPAC deals generally, and media deals in particular, in recent months amid the broader stock market retrenchment. Binance will replace half of the $400 million in commitments from institutional investors announced by Forbes in August, said the people, who declined to be identified before the transaction is announced.
That would make Binance one of the top two biggest owners of Forbes, which will be listed on the New York Stock Exchange under the ticker FRBS, the people said. The crypto company will also get two directors out of nine total board seats, they said.
The move shows the increasing real-world influence of the crypto sector, which has seen surging valuations and minted a new class of billionaires amid global interest in digital assets. While crypto companies have gone public, affixed their names to sports arenas and flooded airwaves with celebrity endorsements, this is the sector’s first big investment in a traditional U.S. media property.
Forbes was founded more than a century ago by the grandfather of editor-in-chief and two-time presidential candidate Steve Forbes. In 2014, Forbes sold a 95% stake to Hong Kong-based Integrated Whale Media at a valuation of $475 million.
Known for its flagship magazine and a digital publishing model that relies on contributors, Forbes has worked to diversify its revenue with licensing deals and e-commerce and direct-to-consumer efforts. The company says it reaches 150 million people through its content and events.
Forbes is also known for its annual rankings of the world’s richest business tycoons.
It’s a category that Binance founder and CEO Changpeng Zhao joined recently. Last month, the net worth of Zhao, who prefers to go by “CZ,” was pegged at $96 billion by Bloomberg News. The figure, a conservative estimate that excludes his personal crypto holdings, makes him easily the industry’s richest entrepreneur.
The investment by Binance, founded barely five years ago, is an indication that Zhao believes content generation will be a growth area for Web 3.0 development. Web 3.0 refers to a more decentralized version of the internet that uses the blockchain, which also underpins cryptocurrencies and non-fungible tokens, or NFTs.
“This is the first step into a marketplace that has really high potential when it comes to adoption of Web 3.0-based tools,” said a person with knowledge of Binance’s strategy. “Our industry has seen a ton of growth and we think you’d have to be a fool to not position yourself in those sectors that are ripe for infrastructure investment.”
The company approached Forbes, which had been weighing options including an outright sale, after identifying three media and content platforms for potential investment, said the people.
Crypto insiders say they expect a deluge of deals this year as companies deploy the enormous sums of money raised in recent fundraising rounds.
Binance plans to invest $500 million in equity funding toward Elon Musk’s $44 billion bid to buy Twitter. Changpeng Zhao, Binance’s CEO, is a big believer in the crypto world’s vision of a new kind of internet, known as Web3.
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