The highly anticipated $800 million deal to sell Forbes Media Group to a group of investors led by American tech executive Austin Russell, the 28-year-old founder of Luminar, has collapsed amid concerns about potential foreign influence in the acquisition.
Integrated Whale Media, the current owner of Forbes, announced on Tuesday that it was terminating the agreement to sell the media group to the Russell-led investors, citing their failure to deliver on closing the deal. Bill Hankes, a spokesperson for Forbes, declined to comment further on the situation.
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The collapse of the sale comes after months of controversy and scrutiny, with questions raised about the potential involvement of foreign entities in the acquisition. The Committee on Foreign Investment in the United States had been looking into the deal, and it drew criticism on Capitol Hill.
Russell had been working to secure funds for the acquisition from U.S. investors over the summer, while also maintaining ties to foreign backers. In a statement on Tuesday, Russell stated that it was in the best interest of all parties involved to terminate the contract.
The bid by Russell to acquire Forbes had raised eyebrows due to his lack of experience in the media industry and the hefty price tag of $800 million, which was more than the combined sale price of Time, Fortune, and The Washington Post. The deal was also clouded by questions about Russell’s connections to a Kremlin-linked tycoon, Magomed Musaev, who had helped secure a $20 million investment in Russell’s lidar technology company in 2016.
In a series of audio recordings obtained by The Washington Post, Musaev claimed to be the buyer of Forbes and described Russell as the “face” of the deal, while insisting on keeping his own involvement quiet. Russell denied any involvement by Musaev or other Russian individuals in the purchase, while Musaev stated that he had no investment in the transaction.
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In August, Senators Tom Cotton and Marco Rubio called on Treasury Secretary Janet L. Yellen to review the deal, alleging that Russell was acting as a front for larger foreign investors. This raised concerns about potential foreign influence in the acquisition.
Despite a news release in September claiming that the $800 million transaction had attracted over $2 billion in demand from American investors, representatives for Russell were unable to disclose the exact terms of the investment. It was also revealed that Russell’s team was still trying to raise substantial amounts of financing in the days following the news release.
In response to the cancellation of the sale, Forbes CEO Mike Federle assured staff that it would not affect the company’s day-to-day operations or business goals.
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The collapse of the Forbes sale to the group led by tech investor Austin Russell has sent shockwaves through the media and tech industries. The controversy surrounding the deal has raised concerns about foreign influence in major U.S. media acquisitions and has sparked a debate about the role of foreign investors in the American media landscape. As the fallout from the failed deal continues to unfold, it remains to be seen what the future holds for Forbes and its potential investors.