Don’t Expect New Bunnies in Playboy Auction

Don’t expect any new players in the Playboy auction.

Yesterday, the company said that it had received a $123 million buyout bid from founder and mascot Hugh Hefner. The $5.50 per share offer would have Heffner buy up all the stock he doesn’t own — he’s already got 70% of Playboy’s Class A voting stock and nearly 28% of class B shares — and is backed Rizvi Traverse Management, a buyout shop that has invested in film studio Summit Entertainment (think Twilight saga).

Marc Bell, CEO of FriendFinder Networks (which owns Penthouse), told peHUB Tuesday that he will likely make a bid for Playboy and that his offer will come “soon.” When asked if his offer will larger than Hefner’s, Bell said “most likely.”

Outside of their long-standing rivalry, it’s not clear what value Playboy will provide for Penthouse. “The [competition] alone makes it interesting,” Bell says.

But it’s unlikely Playboy will ever sell to Bell while Hefner is alive, one banker said. Hefner, in his proposal letter, told the Playboy’s board that he’s not interested in a sale or a merger or selling his shares or even entering into discussions.

So will anyone else—including other PE shops—come in and bid? Don’t bet on it. Playboy has been on the block for nearly two years. Golden Gate Capital and Oak Hill were reportedly interested in buying the men’s publisher in late 2009 — reports that both firms denied.

“Playboy has been in play for so long that anyone who wanted it, would’ve done it,” one buyout executive says.

Up until 15 years ago, Playboy was viewed as upscale, thinking man’s porn. It then lost a chunk of its market to lad mags like Maxim and FHM, and took a larger hit as free adult content proliferated online.

Last month, the company reported that first quarter losses narrowed to roughly $1 million for the time period ended March 31, compared to $13.7 million for the same time period in 2009. In June, Playboy announced that it’s downsizing and expects to record a roughly $3 million charge in second quarter. Cash, as of March 31, stood at $25.4 million while debt was $115 million.

The current strategy for Playboy is to leverage it as a brand rather than a publishing enterprise. The Playboy lifestyle is where the value is, the buyout source says.

“Hef will take it if no one else will,” the source said. “[Playboy] shouldn’t be public anymore.”