Playboy goes from private to public in new venture

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Playboy Enterprises Inc said it has agreed to go public by merging with blank-check acquisition company Mountain Crest Acquisition Corp in a deal that values the owner of Playboy magazine at $413 million, including debt.

The merger will make Playboy a publicly traded company again, nine years after it went private in a $207 million deal led by its late founder, Hugh Hefner, and private equity firm Rizvi Traverse Management.

It is the latest example of a consumer-facing company opting to go public by merging with a so-called special purpose acquisition company (SPAC) rather than through a traditional initial public offering, following the likes of sports betting platform DraftKings Inc.

As part of the transaction, Mountain Crest will sell $50 million of its common stock to institutional investors.

Last month, Reuters reported Playboy’s plans to go public and that it was nearing a deal with Mountain Crest.

The deal is expected to close in the first quarter of 2021, after which the company’s stock will be listed on the Nasdaq under the ticker “PLBY.” Playboy’s existing shareholders will retain control of 66% of the company.

Playboy Chief Executive Ben Kohn said in an interview the brand’s strength provides the foundation for a licensing business with stable revenue streams, and that company sales are poised to increase by 68% this year.

“This business is much more like a SaaS business than a sales organization,” said Kohn, adding its licensing revenue will hit $57 million this year and that over 70% of the revenue next year has been locked in.

Software as a service (SaaS) model, in which software is licensed on a subscription basis, has been well-received by investors, with high multiples achieved by companies that went public this year, including Snowflake Inc and Shopify Inc.

The company plans to use proceeds of the deal to expand into the sexual wellness space and to acquire consumer brands and platforms.

A SPAC uses capital raised through an initial public offering to buy a private company, usually within two years.

Playboy’s Kohn said the Mountain Crest SPAC, which raised $50 million in an initial public offering earlier this year, stood out as it has no warrants outstanding, meaning the dilution will be limited.

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