The Arena Group Holdings Inc. AREN, a technology platform and media company home to more than 265 brands, including Sports Illustrated, TheStreet, Parade Media, Men’s Journal, and HubPages, has signed a definitive agreement under which the company will combine with Bridge Media Networks, a wholly owned subsidiary of Simplify Inventions, LLC.
In connection with the business combination, 5-Hour International Corporation Pte. Ltd. will purchase $25 million of common stock of the combined company, and The Hans Foundation, USA (“Hans Foundation”) will purchase $25 million of preferred stock of New Arena. The Arena Group and Simplify previously signed a binding letter of intent on Aug. 14, 2023.
The proposed transaction is expected to expand the reach and capabilities of The Arena Group and provide it with growth capital while also reducing its debt and extending the terms on its existing debt facilities, further strengthening and fortifying The Arena Group’s balance sheet.
Under the terms of the agreement, The Arena Group stockholders will receive one share of common stock of New Arena for each share of The Arena Group common stock they own. Immediately following the proposed transaction, Simplify and 5-Hour are expected to hold 65% of all outstanding shares of New Arena common stock (on a fully diluted basis).
Simplify has also agreed to purchase, from time to time at Arena’s election, up to $20 million of additional common equity in New Arena, for a period of one year following the closing date of the business combination, to be used for operations and growth.
Pursuant to the proposed transaction, the existing assets of The Arena Group will be combined with the video programming, distribution, and production assets of Bridge Media Networks, including Bridge Media Networks’ two 24-hour networks, NEWSnet, and Sports News Highlights, as well as the automotive and travel properties Driven and TravelHost.
In addition, The Arena Group will receive a five-year guaranteed advertising commitment of approximately $60 million aggregate value from a group of consumer brands also owned by Simplify, including 5-hour ENERGY. The Arena Group intends to use a portion of the cash proceeds to reduce its debt by $26 million from current levels.
The proposed transaction is expected to close in the fourth quarter of 2023 or the first quarter of 2024, subject to the approval of The Arena Group’s stockholders, the receipt of any required regulatory approvals, and certain other closing conditions. Upon completion of the transaction, New Arena is expected to trade on the NYSE American under the ticker symbol AREN.
