Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Hefner and Penthouse in Playboy bidding war

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Shares of Playboy surged 41% Monday as a bidding war emerged for the iconic adult entertainment company.

Founder Hugh Hefner proposed to take the company private Monday morning. Later in the day, the owner of Penthouse magazine said it will put up a bid for its longtime competitor.

Playboy_shares_surge_35_percent.png
Click the chart to view the current price of Playboy shares.

Playboy Enterprises (PLA) said Hefner offered to buy the remaining shares of the company that he didn't already own at $5.50 each, a 40% premium from the stock's $3.94 closing price on Friday. The offer values the company at about $185 million.

Just hours after Playboy's announcement, FriendFinder Networks -- the parent company of Penthouse -- said it was working on a rival offer. That helped boost Playboy's stock above Hefner's offering price. Shares closed at $5.55 a share.

FriendFinder CEO Marc Bell told CNNMoney.com that Hefner's announcement got his attention and that a FriendFinder bid could be announced as early as Monday evening.

"We think the price is low and there's a lot of value there," he said.

Earlier in the morning, Playboy said in a statement that Hefner is concerned about the company's brand and the editorial direction of the magazine and is not interested in selling Playboy to another company.

Hefner, who launched Playboy magazine in 1953 (the first issue featured nude photos of Marilyn Monroe), already owns 69.5% of Playboy's class A stock and 27.7% of its class B stock.

Hefner's proposal mentions a partnership with private-equity firm Rizvi Traverse Management to finance the deal.

Playboy is in the midst of restructuring from a company that relies on traditional media like magazine publishing and movies to one that primarily licenses its famous bunny brand. The company has struggled to keep its magazine division profitable, even after venturing into digital content.

After cost-cutting measures, the company still reported a $962,000 loss in the first quarter of the year, but that was an improvement over its nearly $14 million loss a year earlier.

Playboy CEO Scott Flanders has called 2010 a "transitional year" for the company, saying he expects overall sales to continue to decline but that its licensing business -- its most profitable segment -- would grow.

The company continues to make cuts to streamline the organization and announced in June that it will take a $3 million restructuring charge in its second quarter. Playboy will announce results for that quarter on August 5.  To top of page

Index Last Change % Change
Dow 17,745.98 -5.41 -0.03%
Nasdaq 5,128.79 17.06 0.33%
S&P 500 2,108.63 0.06 0.00%
Treasuries 2.27 -0.01 -0.48%
Data as of 11:07pm ET
Company Price Change % Change
Facebook Inc 95.21 -1.78 -1.84%
Bank of America Corp... 18.13 -0.03 -0.17%
Microsoft Corp 46.88 0.59 1.27%
Whole Foods Market I... 36.08 -4.74 -11.61%
Ford Motor Co 15.10 -0.11 -0.72%
Data as of 4:01pm ET
Sponsors

Sections

Loosening state restrictions have given gun silencer sales a boost. Silencers are now legal in 41 states, compared to 37 four years ago. Also some gun makers are making it easy to attach them. More

Pinterest reveals its diversity numbers and announces how it plans to diversify its workforce. More

Fast-food chains that operate in more than 30 locations nationwide are the sole target of a new rule in New York to hike their minimum wage to $15. But consumers and small business owners, as well as some employees, may be the ones to pay the price. More

You can't blame it on the economy anymore. More Millennials now have jobs, but are still living at home. More