LUXEMBOURG — Manwin said today that it has made a proposal to New Frontier Media's board to acquire the adult transactional TV company for $1.50 per share of outstanding common stock.
The offer represents a 32 percent premium over New Frontier’s closing stock price on March 8 and a 35 percent premium over the six-month historical average of New Frontier Media's share price prior to that date.
In its proposal, Manwin said that it is "highly impressed with New Frontier Media, its board of directors, management team and operations but believes it has been undervalued in the public markets because of its size and market capitalization."
Manwin said that by combining New Frontier Media’s transactional TV business with its own and by leveraging Manwin’s online assets, including both content and traffic, "it will be able to offer even more compelling programming to pay TV distributors and drive additional customers to the pay TV experience."
Manwin already operates Playboy TV through its Playboy Plus Entertainment division in a licensing deal with Beverly Hills, Calif.-based Playboy Enterprises.
The company also owns a number of blue-chip brands, including Brazzers and recently purchased Digital Playground. It also owns YouPorn and Twistys, as well as Spankwire, Webcams Tube8, ExtremeTube, KeezMovies, Mofos, ExtremeTube, JuicyBoys and PornHub.
The Luxembourg-based company, with offices in Montreal and Los Angeles, claims to be the owner of the largest network of adult websites in the world, with more than 60 million daily visitors.
Earlier this month, the largest shareholder of New Frontier Media offered to acquire the remaining shares it doesn’t already own in the company.
The unsolicited offer by investment company Longkloof Ltd. represents a slight premium over the stock’s closing price. Longkloof, which owns 15 percent of New Frontier Media, is offering $1.35 a share for each outstanding share of the Boulder-based company.
Longkloof, a fund based in the Channel Islands in the English Channel, said in a letter to New Frontier Media that it has attempted several times to engage in discussions about acquiring the company and that “expeditious action is necessary” to protect shareholders’ interest.
Longkloof also criticized New Frontier Media’s board, calling the company’s performance under its leadership over the past several years “dismal.”
Sales at New Frontier Media, which makes most of its revenue distributing adult entertainment movies to cable and satellite TV pay-per-view services, has declined steady since 2007 — from $63.2 million to $48.7 million in 2011. It has faced losses in its past two fiscal years.
New Frontier Media offers the Penthouse TV premium channel and pay-per-view services packaged as The Erotic Networks, or TEN, that include Xtsy, Juicy, and VaVoom.
Manwin said its proposal is subject to a due diligence review of the operations and books and records of New Frontier Media.
“Our recent experience with Playboy TV proves to us the value of TV as a distribution platform, and we have been seeking ways to foster additional business in that segment of the industry," Manwin Managing Partner Fabian Thylmann said. " New Frontier Media’s business is a natural fit which should create synergies immediately benefiting both Manwin’s pay TV providers and their customers.”
New Frontier Media CFO Grant Williams did not immediately respond for XBIZ comment on the possible acquisition.
Shares of New Frontier Media traded at $1.23 on the Nasdaq today, down seven cents.
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