Playboy Opts For Private Room

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Playboy Enterprises said Monday that it has accepted a modified offer from Icon Acqusition Holdings, a vehicle headed by its founder Hugh Hefner, to purchase the remaining stock he doesn't already own for $6.15 per share, a move that will effectively take the adult content icon private.
Hefner, who founded Playboy in 1953, initially offered to purchase the remaining stock in Playboy for $5.50 per share in July. Shortly after, rival adult content company - FriendFinder Networks, publisher of Penthouse magazine - lobbed in a counter offer at $6.25 per share. But since Hefner had stated that he had no intention to sell his existing stake in the company - about 70% of its outstanding stock - that counter proposal was considered to have little chance of succeeding.
Playboy formed a special committee of independent directors in July to evaluate Hefner's offer. On Monday, after Hefner tweaked his offer to $6.15 per share, the special committee deemed it sufficient.
The price represents an 18.3% premium over Playboy's closing price on Jan. 7 and a 56.1% premium to the closing price of the stock on July 9, the last trading day before Hefner's proposal was first announced.
Icon Acquisition said it has obtained equity commitments for the transaction from an affiliate of Rizvi Traverse Management and a debt commitment from affiliates of Jeffries & Co.
"With the completion of this transaction, Playboy will come full circle, returning to its roots as a private company," Hefner said in a statement. "The brand resonates today as clearly as at any time in its 57-year history. I believe this agreement will give us the resources and flexibility to return Playboy to its unique position and to further expand our business around the world."
According to a statement, Playboy CEO Scott Flanders will remain in that role and will maintain a significant equity position in Playboy.
Playboy said in a statement that it plans to conduct a tender offer for the shares not owned by Hefner no later than Jan 21. The deal is also subject to a "majority of the minority" condition, where more than 50% of the Class A and B shares not owned by Hefner or already slated to be contributed to the purchaser must approve the deal.
Playboy stock rose 17% (89 cents each) in early trading Monday to $6.09 per share.
Lazard is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom is acting as legal counsel to Playboy Enterprises. Raine Securities LLC is acting as financial advisor and Kaye Scholer LLP is acting as legal counsel to the Special Committee. Moelis & Company LLC is acting as financial advisor and Munger, Tolles & Olson LLP is acting as legal counsel to Mr. Hefner. Jefferies & Company, Inc. is acting as financial advisor and Sheppard, Mullin, Richter & Hampton LLP is acting as legal counsel to Rizvi Traverse.

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