At least three groups of Canadian investors have attempted to buy MindGeek – the parent company of controversial adult entertainment website Pornhub – but have been rebuffed by the majority owner, who is reluctant to relinquish control of the business.
Two sources with knowledge of the bids told The Globe and Mail that various offers for MindGeek’s assets began trickling in at the start of the summer, approximately six months after an explosive exposé by the New York Times revealed that the company had allowed child sexual abuse material and other non-consensual videos to be posted on Pornhub. The Globe is not identifying the sources because they are not authorized to speak publicly about the offers.
The story by Times columnist Nicholas Kristof in December, 2020, triggered swift and harsh condemnation of the Montreal-based company and its owners, and resulted in MasterCard and Visa immediately cutting ties with Pornhub. In the subsequent months, MindGeek and Pornhub were hit with a number of lawsuits on behalf of victims who were the subject of videos uploaded to Pornhub without their consent.
The sources said the company’s revenue plummeted in 2021 primarily because of the costs associated with defending the lawsuits, and a sharp drop in sales because users could no longer pay for content using MasterCard and Visa.
It was in this climate that multiple groups of investors attempted to coax the owners of the company – chief executive Feras Antoon, chief operating officer David Tassillo and Austrian businessman Bernd Bergmair (also known as Bernard Bergemar) – into a sale.
Two of the three bids for the company have been upward of US$600-million, according to the sources. There was also a third bid for an undisclosed amount, according to one of the sources.
In June, The Globe reported that Bruinen Investments Inc., a private equity company founded by former Liberal Party treasurer and cannabis industry entrepreneur Chuck Rifici, was in talks to buy certain assets of MindGeek, including Pornhub. That deal was rejected, sources said.
Mr. Rifici had founded Bruinen in April with the goal of acquiring MindGeek and its prime asset, Pornhub. Back in June, Bruinen’s website had included a brief description of the company and profiles of its executives and board members – which included former RCMP drug czar Derek Ogden – but all that information appears to have been removed. Bruinen did not respond to The Globe’s request for comment on the deal.
Sources also told The Globe that a group of investors led by Michael Serruya, one of the co-founders of the Canadian frozen yogurt chain Yogen Früz, made a bid for MindGeek’s assets, including Pornhub. That deal, too, did not materialize. Mr. Serruya did not respond to a request for comment on his negotiations with MindGeek.
Mr. Tassillo, Mr. Antoon and Mr. Bergmair cumulatively control 90 per cent of the company, but Mr. Bergmair has by far the largest stake in the company, giving him significant sway over any decision to sell MindGeek and its assets, according to sources.
They say that while Mr. Tassillo and Mr. Antoon have appeared to entertain bids to buy the company over the past few months, Mr. Bergmair has ultimately put an end to these conversations because he is reluctant to give up all of his ownership in the company. The three owners are rarely able to achieve consensus over a sale, the sources said, even though they are acutely aware that the company has been bleeding money for the past nine months.
Mr. Tassillo, Mr. Antoon and Mr. Bergmair all did not respond to a request for comment. A spokesperson for MindGeek, declined to comment on any past negotiations.
MindGeek’s main office is in Montreal, but the company is registered in Luxembourg. It employs more than 1,000 people and operates some of the most popular paid and free pornography websites in the world, including Pornhub, YouPorn and RedTube. Its prime asset is Pornhub, which on its own receives an average of 130 million visits a day and regularly ranks among the most visited websites in the world.
MindGeek’s operations are not just confined to adult entertainment – the company owns TrafficJunky, an ad network that claims to serve as many as 4.6 billion ad impressions everyday on porn sites.
Financial records show that MindGeek earned US$460-million in 2018 and turned in a profit of US$22.2-million. But any future buyer of the company will also have to take on a a massive amount of debt. The company carries a US$370-million term loan with an 11.9-per-cent interest rate.
The company faces at least four sex trafficking and child pornography lawsuits led by dozens of women across North America, who allege the company posted images and videos of them – including those featuring sexual abuse – on Pornhub. In April, RCMP Commissioner Brenda Lucki told a House of Commons ethics committee that it would review a request to investigate MindGeek. The RCMP however, has yet to launch an official criminal investigation of the company.
With a report from Joe Castaldo
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.