Playboy is going private.
The board of directors for the iconic but struggling men's brand has agreed to 84-year-old founder Hugh Hefner's $6.15-per-share offer to take the company private.
Hefner first made a $5.50-per-share offer in July. The $6.15-per-share price represents an 18.3 percent premium over the stock price at close on Friday and a 56 percent premium over the closing price at the time of Hef's initial offer.
The new offer puts the value of the company at about $207.3 million. On Monday morning, Playboy's stock price jumped more than 16 percent on the news.
“With the completion of this transaction, Playboy will come full circle, returning to its roots as a private company," Hefner said in a statement. "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.”
In August, the company formed an independent committee to evaluate Hef's offer. On Sunday, the board -- with the committee’s blessing -- unanimously approved the offer and agreed to recommend the transaction to PEI’s stockholders.
Under the terms of the deal, Icon Acquisition Holdings -- a limited partnership controlled by Hefner and backed by Rizvi Traverse Management, a little-known private equity firm -- will offer to acquire all outstanding shares of common stock that Hef and his affiliates do not own (Hefner currently controls approximately 69.5 percent of the Class A (voting) shares and 27.7 percent of the Class B shares).
Playboy chief executive Scott Flanders will remain CEO and "maintain a significant equity investment in Playboy."
“Our strategy is to transform Playboy into a brand management company,” Flanders said. “This transaction will advance our efforts by strengthening our balance sheet and streamlining our operations, while creating opportunities to participate in new ventures. I am excited about the future, and I look forward to working with our new partners as we guide Playboy into the next era.”
Shortly after Hefner's $5.50-per-share in July, Marc Bell, owner of rival Penthouse magazine and FriendFinder networks, made a $210 million counteroffer for Playboy -- but Hef, whose initial offer valued the company at $185 million, scoffed at it: "Playboy isn't in play. I'm buying, not selling."
Hefner said Monday the deal is expected to close before or shortly after the end of the first quarter.
Here's the press release:
FOR IMMEDIATE RELEASE
CHICAGO, January 10, 2011 – Playboy Enterprises, Inc. (PEI) (NYSE: PLA, PLAA) today announced that it has entered into a definitive agreement with Icon Acquisition Holdings, L.P., a limited partnership controlled by Hugh M. Hefner, to take the company private for $6.15 per share.
The $6.15 price represents a 18.3% premium over the closing price Friday, January 7, 2011, of PLA and a 56.1%
