58 years after launching Playboy magazine as a private company, Hugh Hefner has convinced the board of directors of Playboy Enterprises to sell the company back to him. The going private transaction comes as 84-year-old Hefner prepares for another adventure, marrying his third wife, Crystal Harris.
The board agreed to the buyout after Hefner raised his offer to buy out other public shareholders from $5.50 per share to $6.15. Playboy carries about $105 million of debt, so the total enterprise value under the buyout offer is about $312 million. His financial partner is Rizvi Traverse Management.
Hefner’s improved offer pretty much matches the competing bid from FriendFinder Networks, the parent company of Penthouse magazine. FriendFinder had not spelled out a per-share offer, but said it would be willing to pay $210 million for the equity. Hefner’s new bid works out to about $207 million for the equity, including the controlling stake he already owns. Hefner had indicated that he was not willing to sell his own stock (69.5% of the Class A voting shares and 27.7% of the non-voting Class B shares, both of which are publicly traded) to any other bidder.
“With the completion of this transaction, Playboy will come full circle, returning to its roots as a private company. The brand resonates today as clearly as at any time in its 57-year history. I believe this agreement will give us the resources and flexibility to return Playboy to its unique position and to further expand our business around the world,” said Hefner.
Sol Rosenthal, Chairman of the Special Committee of Playboy’s Board of Directors, said: “The Special Committee and the Board have determined that the transaction is advisable, fair to and in the best interests of the Company’s public stockholders.”
Playboy CEO Scott Flanders will remain with the company in his current position and maintain a significant equity investment in Playboy.
RBR-TVBR observation: If we had to choose between marrying a 24-year-old model and taking on a financially challenged media company, we know which one we’d find more interesting. Why Hef wants to do both is a mystery to us.