The Strategist

Playboy shares will be traded again after merger with a shell company

10/02/2020 - 03:28

US Playboy Enterprises Inc, the publisher of the magazine of the same name, will cease to be a private company and will again bring its shares to the open market.

Thure Johnson via flickr
Thure Johnson via flickr
Playboy will go public after the merger with Mountain Crest Acquisition Corp. as part of the deal, according to which it was estimated at $ 415 million, reports The Wall Street Journal.

Mountain Crest is a special purpose acquisition company (SPAC). SPACs are called shell companies because they have no assets other than cash liquidity and do not operate. Thus, they are, in fact, large money pools listed on the exchange. When you buy some other company, it gets a SPAC place on the exchange. That is, for the purchased company, this method is a "back door" to enter the open market.

Upon completion of the deal, Mountain Crest will change its name and will be listed on the Nasdaq under the ticker “PLBY”. This is expected to happen within 60 to 90 days.

Playboy went private in 2011 when founder Hugh Hefner partnered with Rizvi Traverse Management to buy back shares from minority shareholders. In July 2018, the heirs of Hefner, who died in September 2017, sold the remaining stake in Playboy to the private equity fund Rizvi Traverse.

The current shareholders of Playboy will remain the owners of a 66% stake after the deal with the SPAC.