Playboy Enterprises Inc. (PEI) announced an agreement Wednesday to acquire Spice Entertainment Cos. Inc., its chief market competitor, for approximately $95 million, placing the two largest players in adult-themed TV programming under a single umbrella.
Value of the transaction — in which Playboy is acquiring all outstanding shares of Spice for cash and Playboy stock — includes the assumption of debt. For each Spice share, stockholders will receive $3.60 in cash and 0.1524 shares of PEI Class B stock.
Under terms of the deal, Spice’s stockholders will retain ownership of Spice’s digital operations center for video and Internet broadcasts; the option to acquire outstanding stock of Emerald Media Inc., an adult entertainment provider for the C-Band (or backyard satellite dish) market; and certain rights to a library of adult films.
Playboy TV and AdultVision — the adult movie services operated by PEI — had market penetration of 17.9 million U.S. cable and direct broadcast satellite homes as of Sept. 30, 1997, reporting revenues of $52.1 million for the fiscal year ending that same day. Spice’s pair of domestic networks, Spice and the Adam & Eve Channel, reached 21.5 households and had revenues of $22 million for the same period.
“We believe that the acquisition is an excellent strategic fit because the benefits of integrating the two companies will significantly enhance Playboy’s fast-growing and high-margin television business, both here and abroad,” said PEI chairman and CEO Christie Hefner, the daughter of Playboy empire founder Hugh Hefner.
Spice chairman and CEO J. Roger Faherty said that the agreement allows company shareholders to “receive fair value from the restructuring of our company’s operations in 1996 and to participate in Playboy Enterprises’ growth.”
Agreement is subject to Spice shareholder approval and other standard closing conditions. Closing is expected during the second quarter.