Playboy agrees to Hefner buyout offer

CHICAGO (AP) — The publisher of Playboy magazine said Monday it has agreed to a sweetened offer by founder Hugh Hefner to take the company private.

The price of $6.15 a share is an 18 percent premium over Friday’s closing price and values the company at about $207 million. The bid tops Hefner’s offer of $5.50 per share in July.

A group led by Penthouse magazine has also made an offer for Playboy Enterprises Inc. valued at $210 million

But Hefner is Playboy’s largest shareholder with about 70 percent of the company’s voting shares and 28 percent of the nonvoting stock.

The company’s namesake magazine has struggled with competition from the Web, losing readers and advertisers. In November the company reported a wider third quarter loss than a year ago as its revenue fell 7 percent to $52.1 million.

Playboy’s management has been trying to transform the company from a publishing and TV business into a “brand management” company, leaning more on revenue from licensing out the Playboy name and bunny ears for a range of products.

A group of board members had been evaluating Hefner’s offer and decided to recommend the deal to stockholders Sunday night.

CEO Scott Flanders will remain in that position. A tender offer is expected to begin by Jan. 21 and the deal is expected to close by the end of the first quarter.

Playboy shares rose 90 cents, or 17.3 percent, to $6.10 in pre-market trading today.