Friend Finder's bid for Playboy makes concessions to Hefner
Friend Finder Networks has made a $210 million bid for family-controlled Playboy Enterprises Inc, which allows the company's founder, octogenarian High Hefner, to retain a level of control.
In an acknowledgement of the importance of the founding family to the Playboy brand, the offer includes a clause that allows Hugh Hefner to retain editorial control at the magazine and remain in the famous Playboy Mansion.
In his offer letter to the Playboy board, Friend Finder CEO Marc Bell, also said he would retain the existing management and proposed a meeting with the board to discuss his offer on 21 July. Playboy Enterprises confirmed the receipt of the offer and said it will give the bid "appropriate consideration."
As Hefner still controls 70% of the company's Class A voting stock, a successful bid would need to have his support.
Hefner made his own bid to take Playboy private last week when he offered $5.50 per share in cash to acquire all outstanding Class A and Class B common stock. (Continue reading here) The Friend Finder offer is a 10% premium over Hefner's proposal.
US-based Playboy was founded by Hefner in 1953 and he is still very much part of the brand. Along with his 70% of Class A stock, he has a 30% holding of Class B common stock in the company, which went public in 1971 and had 2009 revenues of $240 million.
The company has struggled to compete against free competition on the internet and has recently combined units and cut jobs in an attempt to stem losses. Far from its heyday in the 1970s when circulation of the magazine was close to 7 million, circulation figures today stand at around 1.5 million.
The Friend Finder offer makes some reference to the declining fortunes of Playboy: "We believe that together we can create a 21st century media powerhouse and generate tremendous synergies through the combination of Playboy's iconic brands and licensing engine with the Penthouse brands."
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