Marc Bell, CEO of Penthouse and FriendFinder Networks, made his promised bid for Playboy on Thrusday, offering $210 million — or $25 million more than Hugh Hefner's recent proposal — for the company. Here's the full text of Bell's letter to the Playboy board.
We understand that you have received a proposal from Hugh Hefner to acquire all of the outstanding shares of Class A and Class B common stock of Playboy for $5.50 per share in cash, implying an equity value for Playboy Enterprises of approximately $185 million.
We believe that we can structure an offer to acquire Playboy Enterprises, Inc. in a transaction worth over $210 million of equity value (which could increase based on our receipt and review of certain due diligence information including updated financial data), and would propose a meeting with your board to discuss this opportunity on Wednesday, July 21, 2010.
This would represent at least a 10% premium over the proposal made to you by Mr. Hefner and Rizvi Traverse.
We would propose an arrangement where we would partner with Mr. Hefner in our efforts to drive shareholder value. We envision that following the completion of the proposed transaction, Mr. Hefner would retain editorial control of Playboy Magazine and would be entitled to reside in the Playboy Mansion.
We believe our proposal is in the best interests of Playboy Enterprises and its minority stockholders. Our proposal provides an excellent opportunity for the minority stockholders of Playboy Enterprises to realize liquidity for their shares at a significant premium to market values, provides a basis for future growth, and would reinvigorate the company and enhance the legacy of the Playboy brand.
We would expect continuity of senior management through completion of the transactions contemplated by this proposal, and we are open to participation by continuing members of senior management on a going forward basis.
We have spoken with our financial advisors and have contacted major lenders regarding potential financing for this transaction. We are very confident that ample financial resources will be available to complete this transaction. We contemplate that the definitive agreements will not contain a financing contingency.
This indication of interest is non-binding and no agreement, arrangement or understanding between FriendFinder Networks and Playboy Enterprises, Inc. has been or will be created until such time as definitive documentation has been executed and delivered by all appropriate parties, any requisite consents are obtained and any proposed agreement, arrangement or understanding has been approved by any special committees and the Boards of Directors, as appropriate.
We believe that together we can create a 21st century media powerhouse and generate tremendous synergies through the combination of Playboy’s iconic brands and licensing engine with the Penthouse brands and the demonstrated technological innovations of FriendFinder Networks.
Marc H. Bell
President and Chief Executive Officer
FRIENDFINDER NETWORKS INC.