Playboy Reportedly In Talks For SPAC Merger Targeting Erectile Dysfunction Market

Playboy Enterprises, which launched in 1963 as a magazine business, is now more of a brand business given the downturn of print magazines.

The company could be hitting public markets again via a special purpose acquisition company.

What Happened: The New York Post reported Tuesday that Playboy Enterprises is in exclusive talks with SPAC Mountain Crest Acquisition Corp MCAC. The story did not name a source.

This report comes several days after Reuters said Playboy was eyeing a return to the public markets.

Mountain Crest raised $50 million in a June IPO.

Playboy Enterprises was taken private by founder Hugh Hefner for $207 million in 2011. The Hefner family sold a 35% stake to Rizvi Traverse for $35 million in 2018.

Hefner died in 2017.

Why It’s Important: Playboy is reportedly seeking to expand its line of sexual wellness products and target the erectile dysfunction market.

Other areas of interest also include liquor and cannabis, the Post said. 

Sexual wellness brands have seen increased valuations.

Roman, which launched in 2017 as a digital health care offering for men, raised $200 million in July at a $1.5-billion valuation.

Roman has a partnership with Pfizer Inc PFE for its generic version of Viagra.

Hims, launched in 2019 as a telehealth service for men, raised $100 million in 2019 at a $1-billion valuation.

The ED Drug Market: Pifzer Inc. launched erectile dysfunction drug Viagra back in 1998. The drug went on to see $1.8 billion in annual sales and still makes millions annually despite losing patent protection in late 2017.

Cialis, another erectile drug, is owned by Eli Lilly and Company LLY and Sanofi SNY.

It's unclear whether Playboy will work on its own technology to treat erectile dysfunction or license its brand to a company.

Playboy recently launched a line called CBD by Playboy to boost sexual pleasure. Items include arousal spray, intimacy gel and bath bombs.

Playboy In 2020: Playboy is a well-known brand to consumers and has strong licensing power. In March, the company said it had 97% brand recognition. Licensed Playboy brands generate over $3 billion in global annual sales.

Playboy stopped its print edition due to the COVID-19 pandemic back in March.

The company had already cut the number of yearly issues from 12 to four. 

MCAC Price Action: Shares of Mountain Crest ended Wednesday's session down 2.32% at $10.11.

Shares have traded between $9.85 and $10.75 since going public.