Smart Money -The worlds of pornography and hedge funds combined this month when activist-investment firm Steel Partners proposed a management buyout of New Frontier Media Inc., an adult-entertainmentcompany.
During a recent New Frontier board meeting, Steel Partners manager Warren Lichtenstein told directors he was interested in leading a management buyout of the company and was willing to pay a premium, according to a Tuesday regulatory filing.
Lichtenstein declined to state a price or a specific premium that he was prepared to offer for the business, and executives at New Frontier (NOOF) haven’t received any more “substantive” information about a possible bid other than what the Steel Partners manager presented to the board, the company said in the filing.
New Frontier jumped 8.3% to $8.54 during afternoon trading on Wednesday. More than 750,000 shares traded — more than nine times the average daily volume during the past 10 days.
“We view the news of Steel Partners finally stating its intentions as an indication that New Frontier Media will likely be put into play (at least in investors’ minds), and we could therefore see a ramp in the shares,” wrote Eric Wold, an analyst at Merriman Curhan Ford & Co., in a note to clients on Wednesday. “We would be an aggressive buyer of New Frontier below $10 on any run-up.”
