Penthouse owner offers $210 million for Playboy

Thu Jul 15, 2010 6:13pm EDT
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By Jennifer Saba

NEW YORK (Reuters) - The desire for adult-themed entertainment is heating up.

The owner of Penthouse magazine on Thursday offered to buy rival Playboy Enterprises Inc for $210 million, making a bid that was 13 percent above the buyout proposal from Playboy's iconic founder Hugh Hefner earlier this week.

To sweeten the deal, Penthouse publisher FriendFinder Networks said Hefner is welcome to retain editorial control of Playboy magazine and to continue to reside in the Playboy Mansion -- a property valued at roughly $40 million, including art, according RBC Capital Markets estimates.

Hefner "built a cultural icon and he is a cultural icon," FriendFinder Chief Executive Marc Bell told Reuters in a telephone interview. "He is trying to protect his legacy. We would love nothing more than to help him achieve his goal, protect his legacy and really become a partner."

A company synonymous with bunny ears and centerfolds, Playboy has been struggling to put its business back on course as circulation and advertising revenues decline with people flocking to the Internet for free pornography.

FriendFinder proposed to give Playboy shareholders $6.25 a share, above the $5.50 per share, or $185 million, from Hefner and his partner Rizvi Traverse Management.

Hefner, 84, already owns around 70 percent of Playboy's Class A common stock and 28 percent of its Class B stock. Shares of Playboy closed up a penny, or 0.2 percent, at $5.52 on the New York Stock Exchange on Thursday.

Playboy said in a statement it received FriendFinder's proposal and the board would give it "appropriate consideration."   Continued...