A bidding war for the bunny may be
about to break out.
Playboy Enterprises Inc looks
likely to be in play, with opposing bids from founder Hugh Hefner and the
company that owns long-time rival Penthouse magazine.
Hefner is offering $5.50 in cash
for each of the shares he doesn’t already own, a premium of about 40 per cent
to the Friday closing price of the Class B shares. The bid values Playboy at
Hefner currently owns around 70 per
cent of Playboy’s Class A common stock and 28 per cent of its Class B stock.
Shortly after the announcement,
Friend Finder Network, the owner of Penthouse, said it was preparing to make a
counteroffer. Friend Finder Chief Executive Marc Bell said Hefner’s offer
“dramatically” undervalues Playboy.
The offers for Playboy come as the
company struggles with a drop in advertising revenue and a decline in
readership at its iconic flagship magazine.
In late June, the company said it
cut staff to save $3 million annually.
More than a year ago Playboy
appointed Scott Flanders, the former chief executive officer of Freedom
Communications and the publisher of the Orange County Register, as its top
executive. Previously, Christie Hefner, Hugh Hefner’s daughter, ran the
Speculation mounted that Hugh
Hefner was looking to exit the business he has controlled for more than 50
years as Playboy searched for a potential buyer.
In December, Playboy was in talks
to sell itself to Iconix Brand Group Inc, a company that licenses clothing
brands such as Joe Boxer, but no deal was reached.
Playboy has been trying to
capitalize on its famous bunny ears logo by signing licensing deals with clothing
makers, casinos and clubs as it moves away from its reliance on print
advertising from its magazine.
Playboy said Hefner is partnering
with Rizvi Traverse Management, which has said it will raise financing for the
transaction from major lenders.