Mountain Crest SPAC Buying Playboy for $381 Million, Gaming Deals in Play

Posted on: October 4, 2020, 03:52h. 

Last updated on: October 4, 2020, 04:31h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Mountain Crest Acquisition Corp. (NASDAQ:MCAC) is paying $381 million to acquire Playboy Enterprises. It’s a move that will return the venerable men’s media property to public markets, and could result in future acquisitions of gaming companies.

Playboy Club
A card dealer at the Playboy Club at Palms Las Vegas in 2012. Playboy Enterprises could soon be a public company again. (Image: Associated Press)

Under the terms of the deal, Mountain Crest, a New York-based special purpose acquisition company (SPAC), will deliver 23.9 million shares at $10 apiece to Playboy investors, and assume $142 million worth of the target’s debt, valuing the company founded by the late Hugh Hefner at $381 million. The blank-check company will also sell $50 million in equity to institutional investors. That, along with $58.5 million in Mountain Crest cash, “will be used to fund Playboy’s growth plans.”

Upon closing of the transaction, Mountain Crest will be renamed and is expected to remain listed on the Nasdaq Stock Market under ticker PLBY, and will be led by Ben Kohn, Playboy’s chief executive officer,” according to a statement.

When its share price slumped in 2009, Playboy was warned of possible delisting by the New York Stock Exchange. The company went private two years later in a $207 million deal.

Gaming Angles

Playboy has a long though sporadic history with the gaming industry. Hefner, who died in 2017 at 91 years old, opened a Playboy-themed casino club in 1966 in London, doing the same in Atlantic City, NJ 15 years later. In late 2006, a Playboy Club debuted at the Palms Las Vegas.

Currently, the company has online gaming partnerships with Scientific Games and Microgaming. In an investor presentation filed last week with the Securities and Exchange Commission (SEC), the company mentions possible acquisition targets across four industries, including gaming and lifestyle. As illustrative examples, the firm highlights 888 Holdings, PointsBet, and RummyCircle.com.

“In Gaming, our casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth,” according to Kohn.

Other areas in which the soon-to-be-public Playboy could pursue acquisitions include beauty and grooming, sexual wellness, and style and apparel.

SPACs Remain Hot

Mountain Crest’s purchase of Playboy is the latest in a growing line of SPACs with direct or indirect gaming ambitions, providing avenues for acquired firms to access public market.

Following DraftKings, multiple deals are currently pending, setting the stage for online gaming and sports wagering entities to go public, while several more blank-check companies recently emerged, declaring intentions to potentially engage in gaming-related deals.

Upon going public, SPACs don’t have to tell investors in which industries transactions will be pursued. But given Wall Street’s enthusiasm for areas such as electric vehicles, iGaming, and sports wagering, among others, blank-check companies interested in those areas highlight as much to investors.

Following an initial public offering (IPO), a blank-check company has two years to strike a deal or risk forced liquidation.