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Hefner Seeks to Take Playboy Private

Hefner Seeks to Take Playboy Private
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Jul 12, 2010 9:00 AM PDT    Text size: 
LOS ANGELES — Playboy Enterprises' Hugh Hefner is looking at taking the company he founded private.

Chicago-based Playboy received a proposal from Hefner to buy all the Class A and Class B shares he doesn't currently hold for $5.50 each. Hefner currently holds 69.5 percent of the Class A and 27.7 percent of the Class B shares.

Playboy said that if the deal continues on, a panel of independent directors would review the bid.

With the offer, Hefner said he is not interested in selling or merging Playboy. Nor would he sell shares to a third party or enter into talks with any other financial suitor. Hefner cited his concern for the company's brand, the editorial direction of the magazine and the adult company's legacy.

With Monday morning's offer, the company is valued at $185 million. Just two weeks ago, Playboy said it would downsize its operations and take a restructuring charge of about $3 million in the company's second quarter.

Also Monday, FriendFinder Networks said it plans to make an offer for Playboy, according to the Wall Street Journal.

"We've had an interest in Playboy for a very long time, and we're looking at an alternative proposal," FriendFinder CEO Marc Bell said.

Century City, Calif.-based investment strategy firm Rizvi Traverse Management is facilitating Hefner's offer.

According to Playboy, Rizvi Traverse informed Hefner that it had contacted major lenders regarding potential financing and that Rizvi Traverse is "highly confident ample financial resources" will be available to complete the transaction.

"The proposal letter states that Hefner and Rizvi Traverse contemplate that the definitive agreements would not contain a financing contingency," Playboy said in a statement.

At post time, Playboy common shares were priced at $5.55, up $1.61 or 41 percent, from Friday's trading.

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