HuffPo $315M Sale to AOL is Big Win for Arianna, Lerer and the VCs, Of Course–UPDATED

There’s a lot of snarky tweets this morning about AOL’s planned $315 million buy of the Huffington Post.

“You know what always works out spectacularly well? Flashy mergers of two large media entities”

“HuffPo, the Florida Marlins of blogs, bought by AOL, the Chicago Cubs of mergers.”

“Not to be outdone by AOL/Huffington Post combo, Drudge Report announces its merger with the phone book & Miss Pac Man.”

“Does this mean the Huffington post will start paying its bloggers?”

“Given AOL’s track record, it will likely make Huffington Post a print publication.”

OK, you get the picture.

But, really, AOL buying the Huffington Post is a big win for Arianna Huffington, who co-founded the site in 2005 with Kenneth Lerer, the investor and well known communications exec. The company became profitable in 2010 and is expected to generate $60 million in revenue this year, the New York Times says. The deal is expected to close in late first or early second quarter.

AOL is paying just $15 million of the $315 million purchase price in stock. The rest will be in cash, says the Daily Beast.

UPDATE: The sale represents a big score for the VCs. The Huffington Post received $35 million in funding, including $12.5 million from Softbank Capital, $10 million from Greycroft Partners and $8.3 million from Oak Investment Partners, according to NVCA Moneytree data. Also, two undisclosed investors put in an additional $4.2 million, NVCA said.

Huffington, Lerer, and their friends and family reportedly put in $3 million seed funding, the Business Insider says. Greycroft, Softbank and Bob Pittman invested $10 million over two rounds. Oak Investments Partners led the company’s last $25 million round in December 2008, Business Insider says.

“It’s a big win for the vc firms as far as I can tell,” says one media banker. “They sold the business for 10x 2010’s revenue and 5x what is expected for revenue in 2011–a huge price!”

“Huffington Post raised $37 million and sold for $315 million, or 8.5x capital raised,” another banker says. “Hard to believe anything other than that everyone–the VCs, Arianna and CEO Eric Hippeau–did well, although I have no information on the capital structure.”

“It’s a fantastic outcome–5x trailing, 3x forward revenue–for a company that largely aggregates content and sells the soon to be outdated notion of an audience ‘demographic’ in an emerging age of customized ad targeting/tracking,” a private equity exec added.

AOL declined to disclose if they used an outside financial advisor.

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  • [...] peHUB » HuffPo $315M Sale to AOL is Big Win for Arianna, Lerer and the VCs, Of Course pehub.com/95030/huffpo-315m-sale-to-aol-is-big-win-for-arianna-lerer-and-the-vcs-of-course/ – view page – cached Private Equity Hub (peHub) is an interactive forum for the private equity community, which includes venture capitalists, buyouts professionals, attorneys, bankers, entrepreneurs, MBA candidates studying PE, and assorted hangers-on. Its mission is simple: To help you do your job better, by feeding your head with news and views from/about your peers. Show influential only (2) $(‘#filter-infonly’).change(function() { var el = $(this); var url = document.location.href; var checked = el.attr(‘checked’); if (checked) { document.location.href = url + ((/?/.test(url)) ? ‘&’ : ‘?’) + ‘infonly=1′; } else { document.location.href = url.replace(/[?&]?infonly=1/,”); } }); [...]

  • Curiosly, this afternoon on NYTimes website I saw Arianna catching tons of flak from her alleged readers for “selling out”. I had to submit there the following, which, curiously, didn’t appear to be “kosher” by NYT sensors, and wasn’t posted (yet?). I wonder why…

    “Most of Arianna’s critics don’t realize that the Huffington Post does not really belong to Arianna alone. It belongs to a consortium of her friends, their family and, not the least, venture capital firms. They they would want to sell the HuffPost the minute someone pays them a decent multiple over what they paid to get into the venture. And, yes, despite being left-leaning, it is still a CAPITALIST venture, like it or not.”

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