Sorkin: Playboy's Shareholders Shouldn't Ignore Penthouse Offer Just Because Hef Says So


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Andrew Ross Sorkin raises some good questions todays about the pending acquisition of Playboy either by Hugh Hefner, who wants to take the company private by buying up the remaining shares he doesn’t already own for $185 million, and Penthouse parent company FriendFinder, which has bested Hefner with a $210 million counter offer that he’s more or less scoffed at.Sorkin writes:

Like many family-controlled media companies, including The New York Times Company, Playboy has a dual-class stock structure. Such arrangements are meant to help the controlling family protect the editorial integrity of the product when an unsavory suitor comes along.

But Mr. Hefner’s bid raises an important question: Should Mr. Hefner — or any other dual-class owner — be able to buy his or her company from the public without any competition?


Penthouse’s offer, worth 13 per cent more than Mr. Hefner’s bid, will likely be for naught. Playboy’s special committee of independent directors, which will weigh the offers, has only one real choice: To sell to Mr. Hefner, or not at all…

…Should the company be able to ignore a rival offer like that? Why should public shareholders be disenfranchised from competing bids when a controlling shareholder wants to take a company private?

Especially when the controlling shareholder is better off dead to them!

Sorkin recalls a 2008 analyst’s report morbidly stating:

Given the material expense required for maintenance and taxes on the Playboy Mansion in Los Angeles, and given that Mr. Hefner pays “rent” back to Playboy corporate (recorded as a contra expense) for the privilege of living there, we believe Mr. Hefner’s death could result in a material stock price uptick on the notion that the Mansion could eventually be sold, which would leave the company net debt free. (via Reuters)

Read more at The New York Times >>

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