Playboy Enterprises Inc. on Monday said that its founder, Hugh Hefner, has offered to take his Chicago media company private in a deal valuing it at $185 million. But he may have competition from rival men’s magazine publisher Penthouse.
The 84-year-old Hefner, who has lived at an iconic Holmby Hill estate since the early 1970s, currently controls almost 70 percent of Class A common shares and more than 27 percent of the Class B common shares, according to a regulatory filing. He is offering $5.50 a share, a 40 percent premium to Friday’s closing price.
The proposal letter states that Hefner, who now holds the title of chief creative officer at the company, is being backed by private equity firm Rizvi Traverse Management LLC, which is based in Birmingham, Mich. and has offices in Los Angeles.
Not long after Playboy made its announcement, FriendFinder Networks, the parent of Penthouse magazine, said it also would make a bid for the company, according to the Wall Street Journal.
Hefner’s proposal letter appears to anticipate rival offers. According to a Playboy release, Hefner indicated that he “is not interested in any sale or merger of PEI, selling (his) shares to any third party or entering into discussions with any other financial sponsor for a transaction of the nature proposed in the letter.”
Playboy said its board will form a special committee to consider the proposal and cautioned that it had not received a definitive offer from Hefner.
There has been speculation for more than a year that Hefner was seeking a partner for a merger or acquisition. Founded in 1953, Playboy’s mixture of nude models and often serious journalism became a cultural icon in the 1960s and branched into other media. But dwindling ad revenue and competition from raunchier magazines and the Internet has hurt and the company recently underwent a reorganization. Hefner’s daughter Christie resigned as chairman and chief executive in late 2008.
Playboy shares were up $1.60, or 41 percent, to $5.54 in midday trading on the New York Stock Exchange.
