Hugh Hefner to Take Playboy Private in $207 Million Deal

Hugh Hefner - The Hollywood Sign Trust - 2010
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A firm controlled by the founder will pay $6.15 per share to acquire full control of the company.

NEW YORK - Playboy Enterprises has agreed to be acquired and taken private by a company controlled by founder Hugh Hefner.

The entity, Icon Acquisition Holdings, will pay $6.15 per share for the adult entertainment company, a 18.3% premium over Friday’s closing price and a 56.1% premium over the closing price on July 9, the last trading day before Hefner’s original proposal was announced. The deal values Playboy at around $207 million.

In a sign that shareholders expect the deal to go through, the stock rose Monday to close at $6,09, near the founder's buyout offer price.

Hefner had originally offered $5.50 per share last summer, but was under pressure to boost his offer price amid an approach from rival and Penthouse owner FriendFinder Networks. Hefner is getting financial backing from private equity firm Rizvi Traverse Management.

Said Hefner: "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."  

Sol Rosenthal, chairman of the special committee of Playboy's board that had evaluated the offer, said his team 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 in his current position and maintain a significant 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.”

Icon will launch a tender offer for Playboy shares no later than Jan. 21.