Hefner sued over Playboy share bid

A Playboy Enterprises shareholder has sued the magazine publisher and founder Hugh Hefner, claiming Hefner's plan to purchase the company's outstanding shares is inadequate.

Stockholder Steven Braun's lawsuit was filed yesterday in an Illinois state court at Chicago.

His is the second suit filed after Hefner's July 12 announcement that he plans to take the company private by buying all of its outstanding Class A and Class B stock for US$5.50 ($7.63) a share.

"The Hefner offer is unfair and inadequate because, among other things, the intrinsic value of Playboy common stock is materially in excess of the amount offered," according to Braun's complaint.

Shares of Chicago-based Playboy, publisher of the eponymous magazine known for its photos of nude women, have climbed almost 40 per cent from its US$3.94 July 9 close to US$5.51 yesterday in New York Stock Exchange composite trading.

Hefner owns 69.5 per cent of the company's Class A shares and 27.7 per cent of its B shares, according to Playboy. Hefner, 84, intends to team with Rizvi Traverse Management on the purchase, the company says.

"Hefner is not interested in any sale or merger of PEI," it says.

Martha Lindeman, a company spokeswoman, didn't immediately return a message seeking comment.

Hefner said this week his offer for the company was in shareholders' best interests.

"I am excited about the prospect of Playboy returning to private ownership, which will reinvigorate the company and create a lasting legacy for the Playboy brand," Hefner says.

"I believe my proposal ... is in the best interest of the company and its minority shareholders."

FriendFinder Networks, owner of the rival Penthouse magazine, will make a competing bid for Playboy, said its chief executive officer, Mark Bell.

An offer is forthcoming, Bell said yesterday.

Braun's complaint, which names Hefner and eight directors as defendants, accuses them of breaching their fiduciary duty to shareholders.

He seeks class action status together with a court order blocking any sale until the company sets up a procedure designed to yield the highest purchase price.

- Bloomberg