Check out those intangibles

1 October 2020 By John Foley Follow @johnsfoley

No longer a purveyor of adult magazines, the late Hugh Hefner’s empire is using a SPAC to return to the stock market – ahead of a possible reinvention as an M&A-driven conglomerate. The idea is attractive enough, but the public gaze won’t be any more forgiving this time around.

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Playboy Enterprises plans to return to the stock market through a merger with a listed acquisition vehicle, Mountain Crest Acquisition, that would value the entertainment company at $381 million, including debt.

The merger announced on Oct. 1 would leave Playboy with just over $100 million in cash, roughly half provided by Mountain Crest and the rest by new investors.

The companies believe Playboy can hit $100 million of recurring EBITDA within five years, compared with $11.7 million in 2019, by expanding in areas like sexual wellness, beauty and skincare, and exploiting partnerships with celebrities including Kylie Jenner and music artist Lizzo.

Playboy’s revenue is expected to hit $131 million in 2020, compared with $78 million in 2019. That includes the impact of acquiring Yandy, an underwear retailer, in 2019. The eponymous adult magazine stopped being printed in early 2020.

Playboy was acquired in 2011 by founder Hugh Hefner and private equity firm Rizvi Traverse for $207 million. At the time, the company expected full-year revenue of $216 million, according to a deal filing.

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The merger announced on Oct. 1 would leave Playboy with just over $100 million in cash, roughly half provided by Mountain Crest and the rest by new investors.

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