UPDATE: Playboy Forms Special Committee to Consider Hefner’s Acquisition Proposal
No timeframe set for a decision to be made.
A pair of Playboy Enterprises board members have been selected to serve on a special committee tasked with evaluating Playboy founder Hugh Hefner’s offer to take the company private.
The two directors who make up the committee are Arnold & Porter law firm counsel Sol Rosenthal and global investor Kai-Shing Tao, who was elected to the board in May. Rosenthal has been chosen to serve as chairman of the two-person committee.
“The board of directors cautions PEI’s shareholders and others considering trading in its securities that no decisions have been made by the board of directors or the special committee with respect to PEI’s response to the initial Hefner proposal,” the company says in a statement announcing the new committee. “There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.”
No timeframe for a decision was made.
Last month, Hefner offered to purchase all of the company’s outstanding shares of Class A and Class B common stock at $5.50 per share in cash. Hefner currently owns 69.5 percent of Playboy Enterprise’s Class A stock and 27.7 of its Class B stock.
In his letter to the PEI board of directors, Hefner said he expected it to form such a committee to consider his offer.
In its announcement about the special committee, PEI did not mention Penthouse magazine owner FriendFinder Networks, which later made its own offer to acquire Playboy. The offer was for $210 million—a 10 percent premium over Hefner’s offer.
PEI is expected to report its second quarter earnings later this week.
UPDATE: PEI on Thursday reported a $6.4 million net loss through the first six months of 2010, compared to a $22.4 million loss during the same period last year. The domestic magazine generated $17.3 million in revenue (down from $29.9 million during last year’s period) while digital pulled in $16.5 million, down slightly from $18.2 million.
Its licensing business reported $22.3 million in revenue, up from $19.4 million through June last year. "The licensing group’s strong performance in the [second] quarter demonstrates the viability of our strategy to transform Playboy from a business operator into a brand management company," CEO Scott Flanders says in a statement. The company expects the print/digital group to return to "modest profitability" over the second half."