Blue Ocean (NASDAQ:BOCN) has entered into a definitive agreement to combine with digital media company TNL Mediagene at a pre-money enterprise value of $275 million.

TNL Mediagene holds the Japanese licenses for a number digital media properties as well as Taipei-based The News Lens.

The combined company Is expected to trade on the Nasdaq once the deal is completed in the first quarter of 2024.

Transaction Overview

Blue Ocean has an estimated $193.5 million in its current trust. Unlike many other SPACs announcing deals recently, this trust has been untouched by redemptions as it has not yet had to hold an extension vote.

That will change eventually as Blue Ocean had originally scheduled one for this afternoon, but canceled it as it may automatically extend the deadline by three months to September 7 by virtue of having a definitive agreement in hand.

As the parties themselves predict, this will likely need to be extended further to make it to close.

Blue Ocean’s sponsor and certain other insiders have agreed to not receive their shares in the combined company from promote share conversions for up to three years following close.

The parties have not yet released their merger documents or an investor presentation, but the SPAC’s profile page will be updated once more terms are made available.

Quick Takes: Digital media has been a mixed bag sector for SPAC deals, but many sectors that have lagged in North America and Europe have had positive results in Asia.

The most prominent example of this is Buzzfeed (NASDAQ:BZFD), which had profitability questions going into its combination with 890 5^th Avenue in December 2021, and those only accelerated post-close.

One of the pioneers of digital news, the company announced in April that it was getting out of the business altogether, laying off its newsroom and focusing on viral social content that generated more revenue. It closed in Monday trading at $0.68.

TNL Mediagene appears on paper to very much be an Asian analogue. The company in this form came to be with the merger just last month of Taiwanese newspaper The News Lens (TNL) and Japan’s Mediagene, which hold’s the licenses to produce Japanese versions of digital properties Business Insider, Gizmodo, Lifehacker, Digiday, Roomie, and Mashing Up.

Altogether, these sites rack up an average of 50 million users per month. By comparison, SimilarWeb estimates Buzzfeed takes in just under 100 million site visits per month, although its wider network, including HuffPost, Complex and First We Feast among others, pulls in considerably more.

Nonetheless, it is perhaps noteworthy that the flagship Buzzfeed brand has recently been overtaken in SimilarWeb’s overall rankings of the depth and breadth of its hits by Business Insider. TNL Mediagene has the opportunity to seize on that upward trend line as the holder of BI’s Japan license, but the ad-reliant digital media business models remain precarious in general.

TNL Mediagene believes it can beat the broader industry trends with its AI-powered marketing and ad technology and time will tell if this technology can break it through the noise.

But it is also in some ways a legacy company feeling its way towards a sustainable business model in the internet age like all the rest. Mediagene was founded in 1998 and has shifted its model over time through a series of acquisitions.

Today, it straddles both working as a B2B marketing service and digital media publisher, but it also takes in some fees from commerce connected to content on its platform. Revenue from these fees grew by triple-digit percentages from 2018 to 2021, according to its website, but it has not shared hard financial performance data.

To pull in revenue from beyond digital ads, it runs the Machi-Ya crowdfunding market as well as the Giz-Yatai ecommerce platform, which sells gadgets connected to Gizmodo reviews. It has also launched CoSTORY, a social commerce platform intended to allow joint shopping experience with friends while online.

Machi-Ya primarily pulls together funding for brands and operates as a sort of fashion-focused Kickstarter. TNL Mediagene has also leveraged the platform to position itself as a brand development consultant for companies attempting to raise funds and plan rollouts on the site.

Machi-Ya also runs three original in-house brands on the platform selling titanium drinkware, moisturizing cosmetics and men’s underwear made from recycled polyester fabric.

There are likely many avenues for expanding this portfolio, but consumer ecommerce product margins haven’t greatly outperformed digital ad revenue in recent years. So, this business line may also not be the sort of stable bedrock the wider media company can anchor to.

ADVISORS

• TNL Mediagene Advisors:
  • Morrison & Foerster LLP is serving as legal advisor
• BOCN Advisors:
  • Sidley Austin LLP and Lee and Li are serving as legal advisor
  • Needham & Company, LLC is serving as financial and capital markets advisor