Like so many other public companies, Playboy Enterprises is trading well below where its stock price was before the recession. Sensing an opportunity, founder Hugh Hefner has made an offer to buy out other shareholders and take the company private.
Hefner, with backing from Rizvi Traverse Management, has sent the board of directors an offer to take the company private at $5.50 per share. The stock had closed Friday at $3.94, so the price jumped by more than a third after the bid was publicly disclosed Monday morning.
At age 84, Hefner continues to be the company’s Chief Creative Officer and Editor-in-Chief of Playboy magazine. His daughter, Christie Hefner, had served as CEO from 1988 until stepping down in January 2009. Scott Flanders has been CEO since July 2009, joining the company from newspaper/TV group owner Freedom Communications.
Hefner founded Playboy magazine in 1953 and took the company public in 1971. It has grown to include not only the namesake magazine, but now provides content for television, radio, websites and mobile platforms. It also has numerous consumer product licensing deals for its famous name and trademark bunny logo.
The announcement from Playboy Enterprises noted that Hefner owns 69.5% of the company’s Class A common stock and 27.7% of its more actively traded Class B common stock, which is non-voting. According to the proposal letter, Hefner is not interested in selling his stake to any third party.
The board of directors said it will form a special committee of independent directors to consider the proposal. The committee would retain independent financial advisors and legal counsel to assist it in its work.
Hefner’s offer proposes to pay over $122 million to acquire the shares he doesn’t already own and values the total company equity at $185 million. It also has $105 million of debt, so the offer values the total enterprise at $290 million or so.
Playboy Enterprises reported a net loss of nearly $1 million in Q1, which was a considerable improvement from the loss of $13.7 million for the quarter a year earlier. It reported a net loss of $51.3 million for all of 2009, although it managed to post adjusted EBITDA of $19.3 million.
RBR-TVBR observation: Quite a financial undertaking for a man of 84. But then, Hef’s mother lived to 102. He must be planning to do likewise.