As promised, Penthouse magazine publisher FriendFinder Networks has announced that it has made a proposal to acquire Playboy parent Playboy Enterprises Inc. for $210 million. The proposal was sent to PEI’s board of directors today.

PEI released it’s own statement confirming that it had recieved
FriendFinder’s offer and that it will "give it appropriate
consideration." A Playboy spokesperson did not immediately return a
request for comment.

In connection with its proposal, FriendFinder says it would leverage its 200,000 affiliates in its network of Web sites and social networking companies to extend Playboy’s global reach. “We are very excited about the prospect for the combination of Playboy Enterprises and FriendFinder Networks,” CEO Marc Bell says in the announcement. “We look forward to [Playboy founder Hugh Hefner] and other key members of management being an integral part of the combined companies.”

FriendFinder’s offer comes on the heels of an announcement this week that Hefner is looking to purchase all of Playboy’s outstanding shares of Class A and Class B common stock for $5.50 per share (he already owns 69.5 percent of its Class A and 27.7 of its Class B stock) and aims to take the company private. By way of public announcements, Hefner has made it clear that he does not intend to sell his stake in PEI to any third party.

FriendFinder—which retained Imperial Capital, LLC as financial advisor for the bidding process—says its offer represents a 10 percent premium over Hefner’s offer.

See below for the entire text of FriendFinder’s proposal to PEI’s board of directors:


We understand that you have received a proposal from Hugh Hefner to acquire all of the outstanding shares of Class A and Class B common stock of Playboy for $5.50 per share in cash, implying an equity value for Playboy Enterprises of approximately $185 million.

We believe that we can structure an offer to acquire Playboy Enterprises, Inc. in a transaction worth over $210 million of equity value (which could increase based on our receipt and review of certain due diligence information including updated financial data), and would propose a meeting with your board to discuss this opportunity on Wednesday, July 21, 2010. This would represent at least a 10% premium over the proposal made to you by Mr. Hefner and Rizvi Traverse.

We would propose an arrangement where we would partner with Mr. Hefner in our efforts to drive shareholder value. We envision that following the completion of the proposed transaction, Mr. Hefner would retain editorial control of Playboy Magazine and would be entitled to reside in the Playboy Mansion.

We believe our proposal is in the best interests of Playboy Enterprises and its minority stockholders. Our proposal provides an excellent opportunity for the minority stockholders of Playboy Enterprises to realize liquidity for their shares at a significant premium to market values, provides a basis for future growth, and would reinvigorate the company and enhance the legacy of the Playboy brand.

We would expect continuity of senior management through completion of the transactions contemplated by this proposal, and we are open to participation by continuing members of senior management on a going forward basis.

We have spoken with our financial advisors and have contacted major lenders regarding potential financing for this transaction. We are very confident that ample financial resources will be available to complete this transaction. We contemplate that the definitive agreements will not contain a financing contingency.

This indication of interest is non-binding and no agreement, arrangement or understanding between FriendFinder Networks and Playboy Enterprises, Inc. has been or will be created until such time as definitive documentation has been executed and delivered by all appropriate parties, any requisite consents are obtained and any proposed agreement, arrangement or understanding has been approved by any special committees and the Boards of Directors, as appropriate.

We believe that together we can create a 21st century media powerhouse and generate tremendous synergies through the combination of Playboy’s iconic brands and licensing engine with the Penthouse brands and the demonstrated technological innovations of FriendFinder Networks.



Marc H. Bell
President and Chief Executive Officer