Playboy Enterprises founder Hugh Hefner has offered to buy the company’s remaining shares in a deal that would take the company private,
the Associated Press reported.
Hefner owns 69.5% of Playboy’s Class A stock and 27.7% of its Class B shares, the report noted. His proposal said he was discussing a partnership with private equity firm Rizvi Traverse Management.
Playboy’s board cautioned shareholders that no decisions have been made regarding the proposal. If the proposal moves forward, the board said that it would form a committee of independent directors to consider its merits.
The
Chicago Tribune
noted
that FriendFinder Networks Inc., which owns the rival Penthouse adult franchise, is preparing a competing bid for Playboy and that other companies might also bid for the company.
The
Tribune
noted that last year, Hefner blocked competing bids from Iconix Brand Group Inc. and a former Playboy executive. The report said:
Playboy said in a statement that Hefner told the board of directors he was not interested in any sale or merger of Playboy and was not talking with other partners besides Rizvi.
The
Tribune
report said the Playboy brand has great potential and that since 2009, when media veteran Scott Flanders replaced Hefner’s daughter Christie as CEO, “the company has been outsourcing operations and shedding employees to transform itself from a publisher into a brand management company.”
A
Tribune
editorial said
that “what once was known ad the Playboy empire is less than it was — and ultimately Hef has no one to blame but … Hef.”
Even before the Internet changed the economics of the media world, Playboy operated more like a private company than a public one. Hef’s heavy stockholdings let him control it, and the high expenses of running his California mansion and supporting his cherished magazine made little business sense. For years, his daughter Christie served as chief executive, and only after the stock price dwindled to almost nothing at the end of 2008 did she step aside, to be replaced by an outsider.
The
Tribune
editorial noted that Hugh Hefner has said he wants to pass the company on to his young sons, Marston and Cooper.
(Source: Associated Press, July 12, 2010;
Chicago Tribune
, July 12, 2010.)
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