The planned acquisition of Forbes Global Media Holdings by Luminar Technologies CEO Austin Russell has been called off, according to sources familiar with the matter. The deal, which valued the business news publisher at nearly $800 million, was announced in May 2023, but faced regulatory hurdles and financing issues.
Why Russell backed out of the deal
Russell, a 28-year-old tech billionaire who founded Luminar Technologies, a company that develops lidar sensors for autonomous vehicles, was supposed to buy an 82% stake in Forbes from its majority owner, Hong Kong-based Integrated Whale Media Investments (IWM). However, sources said that Russell only put in $10 million of his own money as part of the bid, and relied on foreign investors to fund the rest.
The deal was structured in a way that obscured how much money foreign investors may put in, raising concerns among U.S. regulators and lawmakers. Some of the investors involved in the bid included:
- Sun Group, an India-based investment firm led by Shiv Khemka, who was previously the lead bidder for Forbes before Russell joined the consortium.
- GSV, a Silicon Valley-based investment firm that helped bring in other investors through a special purpose vehicle (SPV), but did not invest any of its own capital.
- Julius Mwale, a Kenyan businessman who was expected to put in tens of millions of dollars.
- Bulat Utemuratov, a Kazakhstani businessman who was in talks to put in roughly $50 million, but later withdrew from the deal.
The deal announcement in May 2023 may have been a trial balloon to see how the media and Congressional leaders would react to the agreement, sources said. However, the deal faced strong opposition from some lawmakers who questioned the involvement of foreign investors in a U.S. media company.
What this means for Forbes and its owners
The collapse of the deal is a setback for Forbes and its owners, who have been trying to sell the company for years. Forbes, which was founded in 1917 by B.C. Forbes, is one of the oldest and most prestigious business publications in the world, with a global audience of over 140 million people.
IWM bought a majority stake in Forbes in 2014 from the Elevation group, which included U2 singer Bono, in a deal that valued the company at a reported $475 million. IWM, which is led by Tak Cheung Yam, a Hong Kong-based investor and philanthropist, said it wanted to expand Forbes’ presence in Asia and other emerging markets.
However, IWM faced financial difficulties and legal disputes with some of its creditors, and was eager to sell its stake in Forbes. The company tried to go public via a blank check merger in 2020, but pulled the plug on the process due to regulatory concerns and a slowdown in the markets. It then began talks with the investor consortium led by Sun Group, which later brought in Russell as the majority stakeholder.
The deal with Russell was expected to close by the end of March 2023, but was delayed due to regulatory issues and financing problems. IWM will now have to look for another buyer for Forbes, or try to revive the deal with Russell and his partners.
How Forbes will cope with the changing media landscape
The failed deal also raises questions about how Forbes will cope with the changing media landscape, which has been disrupted by the rise of digital platforms, social media, and new forms of content creation. Forbes has been trying to innovate and diversify its revenue streams, by launching new products and services, such as:
- Forbes8, a video-on-demand network that offers inspirational and educational content for entrepreneurs and business leaders.
- Forbes Advisor, a personal finance and consumer website that provides expert advice and reviews on topics such as credit cards, loans, insurance, and investing.
- ForbesLive, a series of events and conferences that bring together influential leaders and thinkers from various industries and sectors.
- Forbes Store, an online marketplace that sells branded merchandise and curated products from Forbes’ partners and contributors.
Forbes has also been investing in its journalism and editorial quality, by hiring more reporters and editors, expanding its coverage of topics such as technology, health, and diversity, and strengthening its fact-checking and verification processes. Forbes claims to have over 2,800 contributors and 45 licensed local editions around the world.
However, Forbes faces stiff competition from other business media outlets, such as Bloomberg, The Wall Street Journal, The Financial Times, and Business Insider, as well as new entrants, such as Axios, Quartz, and Substack. Forbes will have to find a way to differentiate itself and retain its loyal audience, while also attracting new and younger readers.
