Playboy, Founder Hefner Sued by Investor Challenging Stock-Purchase Plan

A Playboy Enterprises Inc. shareholder sued the magazine publisher and founder Hugh Hefner, claiming Hefner’s plan to purchase the company’s outstanding shares is “inadequate.”

Stockholder Steven Braun’s lawsuit was filed today in an Illinois state court at Chicago. His is the second suit filed after Hefner’s July 12 announcement that he plans to take the company private by buying all of its outstanding Class A and Class B stock for $5.50 per share.

“The Hefner offer is unfair and inadequate because, among other things, the intrinsic value of Playboy common stock is materially in excess of the amount offered,” according to Braun’s complaint.

Shares of Chicago-based Playboy, publisher of the eponymous magazine known for its centerfold photos of nude women, have climbed almost 40 percent from its $3.94 July 9 close to $5.51 today in New York Stock Exchange composite trading.

Hefner owns 69.5 percent of the company’s Class A shares, and 27.7 percent of its B shares, according to the July 12 statement issued by Playboy announcing his offer.

Hefner, 84, intends to team with Rizvi Traverse Management LLC on the purchase, the company said.

“Hefner is not interested in any sale or merger of PEI,” it said.

Martha Lindeman, a company spokeswoman, didn’t immediately return a voice-mail message seeking comment on the complaint.

FriendFinder Networks Inc., owner of the rival Penthouse magazine, will make a competing bid for Playboy, said its chief executive officer, Mark Bell.

An “offer is forthcoming,” Bell told Bloomberg News yesterday.

Braun’s complaint, which names Hefner and eight directors as defendants, accuses them of breaching their fiduciary duty to shareholders. He seeks class action, or group, status together with a court order blocking any sale until the company sets up a procedure designed to yield the highest purchase price.

Robert Weiser, a lawyer for Braun, declined to comment.

The earlier suit, making similar allegations, was filed yesterday in Delaware Chancery Court in Wilmington.

The Chicago case is Braun v. Playboy Enterprises Inc., 10CH30121, in the Chancery Division of the Cook County, Illinois, Circuit Court (Chicago). The Wilmington case is Germershausen v. Hefner, 5632, Court of Chancery, State of Delaware (Wilmington).

To contact the reporter on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net.

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