Breaking News

Tweet TWEET

Playboy Enterprises Agrees to Go Private in $6.15-Share Hefner-Led Buyout

Playboy Enterprises Inc. agreed to be taken private for $207 million by founder Hugh M. Hefner, who increased his bid to gain full control of the 58-year-old magazine publisher amid slumping circulation and losses.

Hefner, 84, is offering to buy the Class A stock and Class B shares he doesn’t already own for $6.15 per share, representing an 18 percent premium over the Class B closing price of $5.20 a share on Jan. 7, the company said in a statement today. Hefner said in July he would pay $5.50 a share in cash for the stock.

The decision by a Playboy board committee to support Hefner ends a contest for control with FriendFinder Networks Inc., owner of Penthouse adult magazine, which in July said it would offer $210 million for Chicago-based Playboy. The board determined Hefner’s bid is in the company’s best interests, Sol Rosenthal, a board member, said in a statement.

Playboy’s agreement is with Icon Acquisition Holdings LP, a limited partnership controlled by Hefner. Icon has received commitments from Rizvi Traverse Management LLC and Jefferies & Co. to finance the transaction. Hefner owns 69.5 percent of Playboy’s Class A stock and 27.7 percent of the B stock.

“This agreement will give us the resources and flexibility to return Playboy to its unique position and to further expand our business around the world,” Hefner said in a statement.

Playboy Class B shares rose 89 cents, or 17 percent, to $6.09 in New York Stock Exchange trading. The stock increased 63 percent last year.

Playboy History

Scott Flanders, chief executive officer, will remain in his position as part of the deal, the company said.

Marc Bell, CEO of FriendFinder, said in an interview on Jan. 7 that his offer was still pending. He couldn’t be immediately reached for comment today.

Playboy, founded by Hefner in 1953, expanded around the globe in the 1960s and ‘70s when Hefner ran the company. The company went public in 1971 and circulation hit 7.2 million for one issue in 1972.

The company, which also produces television content and licenses its logo, has seen magazine circulation and revenue drop in recent years. Last year, the company reduced Playboy magazine’s rate base, the total of newsstand and subscription sales guaranteed to advertisers, to 1.5 million from 2.6 million.

There have been 397 acquisitions of U.S. periodical publishing companies in the past five years, for an average premium of 17 percent compared with the 20-day average trading price before the announcement, according to Bloomberg data.

To contact the reporter on this story: Brett Pulley in New York at bpulley@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.