Condé Nast Owner Advance Makes Nearly $2 Billion on Reddit IPO
The windfall comes as management is in a bitter dispute with the Condé Nast union over layoffs
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Advance Publications, owned by the Newhouse family which also owns Condé Nast, made a stunning windfall of nearly $2 billion as Reddit went public on the New York Stock Exchange on Thursday.
As of Thursday, Advance’s investment of $10 million for a major stake in the social media company in 2006, was worth $1.97 billion. But the massive win comes as Conde Nast has faced a staff revolt over layoffs at the legacy publishing company.
Shares for Reddit opened at $47 each compared to the IPO price of $34, which valued the social media company at $6.4 billion.
Advance Publications owns 33.5% of the voting power of the outstanding Class A and Class B common stock, equivalent to over 42 million shares.
On Wednesday, the Condé Nast Union called for a protest inside executives’ offices to protest additional layoffs that they say were threatened at a contentious bargaining session on Tuesday. According to the Union, management added five more staffers to their layoff list, just two weeks after CEO Roger Lynch said he had no further plans for job cuts in an interview with Axios.
Advance will have “significant influence” over the management, business plans, and policies of Reddit with the ability to designate two directors and one nonvoting board observer. Additionally, “any increase in the size of our board of directors that would cause our board of directors to consist of more than ten members will be subject to Advance’s prior written approval,” the filing states.
The company is also prohibited from selling more than 42 million Reddit Shares during a six-month lockup period.
While it is unclear if Condé Nast will benefit from Advance’s Reddit windfall, it comes at a time when a rift between Condé Nast management and the union has intensified in recent days.
Condé Nast management fought back by filing an unfair labor practice charge against the union on Tuesday. Management argues that the union is engaging in “bad-faith, surface bargaining,” by not addressing their “workforce reduction proposal seriously.”
“Despite our best efforts to avoid this, the union’s delay is leaving us with no choice other than to find these cost savings,” an internal memo read. “Today we told the union that we will be adding additional roles to the proposed reduction list.”
Bargaining between management and the union continues on Thursday.
In November, Lynch announced that the Condé Nast would be cutting around 5 percent of its current workforce, which would impact around 270 employees. Over 400 unionized Condé Nast employees staged a walkout in January coinciding with the Academy Awards nominations announcement, which is a big coverage day for many of the company’s outlets.
“The staff must be furious that CEO Roger Lynch has put them through the most painful cost-cutting ever while all the time likely knowing their parent company was going to come into this financial windfall,” a former Condé Nast staffer told TheWrap.
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