Playboy Class Action Lawsuit Settled
DOVER, Del. — A settlement has been reached in a class action suit against Playboy Enterprises Inc. and founder Hugh Hefner stemming from his private takeover of the company.
The Associated Press reported that a Delaware judge approved the settlement on March 19 in which Playboy shareholders agreed to accept $5.25 million in cash in return for dropping the lawsuit.
Shareholders will receive about $4 million after attorney fees and expenses, or 17 cents per share.
Hefner made a play for the company in 2010 offering $5.50 a share for the roughly 30 percent of Playboy's outstanding voting shares he didn't own.
But in 2011, the value of the company was questioned, part of which was an action by two shareholders who sued complaining that they were shortchanged and weren't given enough information about the deal. They claimed Hefner underestimated the value of his Los Angeles mansion as part of his plan to pay the less than market value.
An amended shareholder lawsuit was filed in Delaware Chancery Court against Hefner and Playboy Enterprises citing the worth of the Playboy Mansion to be $54 million, not the $1.2 million Hefner and Playboy claimed.
The bid was later upped to $6.15 a share, an 18 percent premium over the previous day's closing price.
Hefner took control of the company in the 2011 in the deal funded with $195 million of debt and $185 million from private investment firm Rizvi Traverse.