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

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.