Hugh M Hefner, the founder of the iconic Playboy brand, yesterday made a bid for the remaining shares in Playboy Enterprises Inc he does not already own in a bid to take the company private.
In a proposal letter to the Playboy board, Hefner offered $5.50 per share in cash to acquire all outstanding Class A and Class B common stock, valuing the company at $185 million. He plans to partner with Traverse Management LLC to finance the deal.
Following Hefner's offer, the company that publishes rival magazine Penthouse, Friend Finder Inc, signalled its intention to make a bid when CEO Marc Bell confirmed to the Financial Times that they were working on an offer. Friend Finder has yet to make a formal offer to the Playboy board.
In his letter to the board, Hefner, 84, outlined his reasons for wishing to take the company private, including his concerns for "the editorial direction of the magazine and PEI's legacy," a statement on the Playboy website said. "Hefner is not interested in any sale or merger of PEI, selling Hefner's shares to any third party or entering into discussion with any other financial sponsor for a transaction of the nature proposed in the letter."
Christine Hefner, Hugh's daughter, served as Playboy's CEO for 20 years until January 2009, when she stepped down to be replaced by non-family Scott Flanders. In a 2007 interview with Campden FB, Christine reinforced the idea that editorial integrity was as important to Playboy as its cover images.
"It's a magazine that was the first publication to lobby for and then file lawsuits on behalf of legalised contraception and abortion; it's been a pioneer in advocating gay rights; a pioneer in advocating for the equal rights amendment; and the Playboy Foundation gave the seed grant that set up the women's rights project of the ACLU (American Civil Liberties Union)," explained Christie. (To read the full interview click here)
US-based Playboy was founded by Hefner in 1953 and he is still very much part of the brand. He already owns 70% of the Class A voting stock and 30% of the 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.
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