PE-backed Playboy to go public again in deal with SPAC

Playboy is going public again after being acquired by a blank-check firm, a deal that valued the brand made famous by its iconic adult magazine at $415m, the company said.

Playboy, which was taken private in 2011 by founder Hugh Hefner and private equity firm Rizvi Traverse, will return to the public markets by merging with Mountain Crest Acquisition, a special acquisition company, or SPAC, set up earlier this year that trades on the Nasdaq exchange.

As part of the deal, Playboy will receive $58m that Mountain Crest had raised, plus another $50m in private investment in public equity, or PIPE, proceeds brought in from institutional investors.

Playboy’s existing owners will retain control of 66% of the company following the transaction. When the deal is approved by the Securities and Exchange Commission, the company name will become Playboy and it will trade under the ticker PLBY. That is expected to happen in 60 to 90 days, the company said.

SPAC deals have become an increasingly popular way to go public since the coronavirus pandemic rattled traditional markets for initial public offerings. Blank-check companies turn the traditional IPO model on its head by going public as a shell and raising large pools of cash with the sole purpose of acquiring a business. The acquired firm then takes over the spot on the exchange once the deal is complete.

The process is considered a quicker and less complicated way of going public, and such deals have accounted for a much bigger chunk of the money raised in public offerings this year than in years past.

Notable companies to go public recently via blank-check companies include space firm Virgin Galactic Holdings and sports-betting firm DraftKings. Struggling streaming-video service Quibi has considered a reverse-merger with a blank-check company to go public, The Wall Street Journal has reported.

SPAC deals have come under scrutiny from the SEC over questions about how sponsors of the blank-check companies disclose their ownership and how any compensation is tied to an acquisition. Some say investors in the vehicles have little to go on, since they have no real operating history.

Since Hefner’s death in 2017 at age 91, Playboy has moved away from publishing to become more of a brand licensing and commerce business. The Hefner family sold its 35% stake in the company to Rizvi Traverse in 2018 for $35m.

Playboy’s chief executive, Ben Kohn, said the deal with Mountain Crest will put over $100m in unrestricted cash on the company’s balance sheet, allowing it to expand further into e-commerce and the lingerie and intimate-accessories space.

“This capital will really allow us to accelerate our growth,” he said.

Earlier this year, Playboy ceased publishing its magazine that chronicled the sexual revolution, after nearly seven decades on the newsstand. In February, the company also acquired Yandy.com, an online adult apparel and accessory business with a large client list and sizable distribution and fulfillment infrastructure.

That deal has helped put Playboy on track to increase revenue by 68% in 2020, Kohn said.

Source: Wall Street Journal

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