Playboy Enterprises Inc's talks to sell itself to Iconix Brand Group are facing “serious roadblocks” and it is very likely the two sides will not reach a deal, a source familiar with the matter said.
Efforts are being made to resolve the issues, but the two sides will probably not reach a resolution, the person said on Wednesday, requesting anonymity because the talks have not been made public.
Earlier on Wednesday, Bloomberg had reported that Iconix was pulling out of talks with Playboy. The news sent Playboy shares down 13% on the New York Stock Exchange.
Both Playboy and Iconix declined comment on the matter, but Playboy spokeswoman Martha Lindeman said the company had a board meeting on Tuesday.
One of the key issues is that Iconix - which owns and licenses clothing brands such as Candies, Joe Boxer and Rocawear - wants to license the brand and divest or shut down Playboy units.
In addition to its well-known magazine, Playboy also has TV operations and a licensing business based on its 'Bunny Ears' logo, an image of a rabbit wearing a bowtie.
No other buyers have expressed interested in Playboy at this time, the source said.
If Playboy cannot seal the deal with Iconix, its future is uncertain amid plunging sales.
Playboy magazine sales, like most businesses in the publishing industry, have suffered in recent years as readers have migrated to the Internet and advertisers have moved more business to websites.
Last month, Playboy Enterprises said it would outsource all its publishing operations except for editorial to American Media Inc in a bid to cut costs and return its namesake magazine to profitability in two years.
OPEN FOR SALE FOR MONTHS
Playboy had been open to talking to buyers for months, even before the appointment of a new chief executive in June, when Scott Flanders replaced founder Hugh Hefner's daughter, Christie Hefner.
Playboy became a racy icon of the swinging bachelor era in the 1960s, offering the promise of an urban lifestyle as well as photographs of naked women. In addition to the models, celebrities such as singers Madonna and Nancy Sinatra have been in the magazine.
Playboy also built a reputation as a magazine for literati, featuring contributions over the years from writers like Norman Mailer, Vladimir Nabokov and P.G. Wodehouse, as well as interviews with well-known figures from jazz legend Miles Davis to former US President Jimmy Carter. (Reuters)