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American media mogul Byron Allen has now committed about $128 million to BuzzFeed stock after his family office made its third purchase since taking control in May, this time paying $1.06 a share, roughly a third of its original price.
The latest deal, for 1.7 million newly issued shares worth about $1.8 million, closed on Sept. 11 through Allen Family Digital, the vehicle that holds his stake, BuzzFeed disclosed in a filing with the U.S. Securities and Exchange Commission. The price matched the stock's Nasdaq close the previous day.
The three purchases add up to roughly $127.6 million in total consideration. Only around $27.6 million of that has been cash, however. The bulk sits in a promissory note Allen's firm owes the company.
Three buys, three lower prices
In May, Allen Family Digital agreed to buy 40 million shares at $3 each, a $120 million deal that made Allen chairman and chief executive and handed his firm about 51% of the company. Just $20 million was paid in cash. The remaining $100 million came as a five-year note at 5% interest, secured by 33.3 million of the shares themselves.
By mid-June the stock had slid to $1.44, and the family office picked up another 4 million shares at that price for about $5.8 million. Three months later it paid $1.06. Its holding now stands at 45.7 million shares, according to a Form 4 filed with the SEC.
Because Allen leads BuzzFeed's board and Allen Family Digital is its controlling shareholder, each deal counts as a related-party transaction. Allen disclosed his interest and abstained from the vote on the latest one, the filing said. The audit committee signed off under the company's related-party policy, and four disinterested directors approved it after finding the terms fair and reasonable to shareholders.
What the money buys
The new agreement also gives Allen Family Digital registration rights. Once it asks, BuzzFeed must file a resale registration statement within 60 days and keep it effective until the shares can be sold freely, with the company covering the costs, including counsel for both sides.
At $1.8 million, the latest injection is small next to BuzzFeed's needs. Revenue fell 12.4% to $31.6 million in the first quarter, and the company used $12.5 million of Allen's May cash to pay down debt.
Allen has framed BuzzFeed and HuffPost as the base for a free streaming service drawing on his Allen Media Group, which owns broadcast stations, The Weather Channel and hundreds of FAST channels. He has said BuzzFeed is "officially chasing YouTube." Co-founder Jonah Peretti, who ran the company for 20 years, now heads BuzzFeed AI.
The share purchase agreement also commits BuzzFeed to use commercially reasonable efforts to keep its Class A shares listed on Nasdaq. At $1.06, the stock sits close to the exchange's $1 minimum bid threshold.
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