Hefner to Take Playboy Private

Hugh Hefner will take Playboy Enterprises private in a deal that will secure his control over the company he founded more than 50 years ago. Mr. Hefner first offered in July to buy up the stock in Playboy that he did not already own for $5.50 a share. But to get the deal done, Mr. Hefner had to sweeten his end of the bargain. Under the terms of the deal announced Monday morning, Mr. Hefner and the holding company that will control Playboy are paying $6.15 a share — a 56 percent premium over the stock's closing price on July 9, the last day of trading before the first offer was made. The deal values Playboy at around $200 million. Mr. Hefner, 84, has always desired to retain as much control over the company as possible, even as it went public, but he was forced to relinquish some of his power to outsiders. On Monday, he heralded the deal as the best way to position the company for further growth. “With the completion of this transaction, Playboy will come full circle, returning to its roots as a private company,” Mr. Hefner said. “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.” The deal also pointed to how Playboy views its future: not as a publishing company but as a branding management company. One of the areas the company invested in as it dealt with an exodus of readers to the Internet was the sale of rights to its signature bunny ears logo on clothing, accessories and nightclubs. Like many media companies whose main source of revenue comes from a print product, Playboy has struggled with declining readership. It has eliminated jobs in recent years, closed its New York office and outsourced all noneditorial functions to American Media. In 2009, the company's board also brought in a new chief executive, replacing Mr. Hefner's daughter, Christie, with Scott Flanders, an outsider to Playboy's tradition-bound culture. As part of the deal announced Monday, Mr. Flanders will stay on as chief executive, the company said. “Our strategy is to transform Playboy into a brand management company,” Mr. Flanders said on Monday. At one point, FriendFinder Networks, the owner of longtime rival Penthouse, had offered to buy Playboy as well. But the offer never got much consideration. Mr. Hefner, who owns 70 percent of the company's voting shares, said he was not interested in selling. Sol Rosenthal, a Playboy Enterprises board member who led a special committee to evaluate Mr. Hefner's offer, called the deal “advisable, fair to and in the best interests of the company's public stockholders.” [view link]