NEW YORK (Reuters) - Hugh Hefner, whose Playboy magazine first exposed many Americans to the possibilities of sexual freedom during the buttoned-up 1950s, is taking the bunny private.

Playboy magazine founder Hugh Hefner poses for a portrait at his Playboy mansion in Los Angeles, California, July 27, 2010. REUTERS/Lucy Nicholson

Playboy Enterprises Inc, the publisher known for its bunny ears and nude centerfolds, plans to go private in a deal that values the company at $207 million. The owner of rival Penthouse magazine earlier offered a higher bid.

Hefner, 84, founded Playboy with $600 in 1953 when he published the first edition of Playboy magazine, featuring a partially nude photograph of Marilyn Monroe.

Playboy has been publicly traded since 1971, and its investors, including Hefner, have seen the company’s stock price fall in recent years as people turn from magazines to the Internet for free pictures of naked women and pornography.

As recently as 1999, its shares were trading at more than $30 before falling to less than $2 in early 2009 during the financial crisis.

“(Hefner) has been taking it on the chin from a number of different shareholders demanding the company be sold or go private,” said Caris & Co analyst David Miller, who raised the rating and price target on Playboy on December 22. “This silences those guys and lets Hefner concentrate on what he wants to do, which is to be editor-in-chief of the magazine.”

The company has been changing its business to focus more on licensing the popular “Bunny Ears” logo, a white silhouette of a rabbit head with prominent ears and a bow tie.

“The reality for our business is that we face significant challenges over the next couple of years in executing this transformation,” said Playboy Chief Executive Scott Flanders.

“When I look at this transaction, I think it’s not only fair to the shareholders today, but it benefits the company because it enables us to look three to five years out and it’s not realistic in a public environment.”

Flanders will remain at the company and keep a “significant equity investment” in Playboy, the company said on Monday.

One shareholder Reuters spoke to hates the deal.

“I am being robbed,” said Mark Boyar, president of Boyar Asset Management and the Boyar Value Fund, which holds close to 2 percent of Playboy shares. “We are very disappointed in the price. I would have preferred this to remain a public company so the turnaround can play out.”

Flanders said he “appreciates” Boyar’s endorsement embedded in the comment.

HEFNER -- ICON

Icon Acquisition Holdings L.P., which Hefner controls, plans to buy Playboy’s shares along with Rizvi Traverse Management LLC, and has a debt commitment for the deal from Jefferies & Co.

Rizvi Traverse owns equity investments in talent agency International Creative Management and the studio behind the popular “Twilight” movies, Summit Entertainment.

Playboy has about $115 million in debt.

Hefner owns about 70 percent of Playboy’s Class A common stock and 28 percent of its Class B stock. He and another large shareholder, Plainfield Asset Management, plan to transfer their shares in the deal.

Icon is offering shareholders $6.15 per share, higher than an earlier offer and a premium of about 18 percent to Friday’s closing price.

The tender offer will begin by January 21 and will expire after 20 business days. More than 50 percent of the Class A and Class B shares outstanding -- roughly 22 million -- must be tendered and not withdrawn.

In July, Hefner made his first offer to buy the company at $5.50 per share that was then countered by the owner of rival Penthouse magazine FriendFinder Networks.

FriendFinder Networks offered $6.25 per share kicking off a bidding war for the company. FriendFinder’s offer in July valued the company at $210 million..

Playboy’s board formed a special committee in August to consider Hefner’s bid.

Marc Bell, the chief executive of FriendFinder Networks, said he met with Playboy and the special committee.

“It’s over and done,” Bell said. “At the end of the day, it’s (Hefner’s) call. We wish him well. There is no ill will here on our part.”

AFTER THE DISCO

Hefner made Playboy a symbol for a lifestyle he embodied as bachelor extraordinaire, living in the Playboy Mansion surrounded by wealth and beautiful women.

Many men in the gray flannel suit years and Frank Sinatra “Rat Pack” years of the Eisenhower administration, as well as the 1960s, subscribed to the magazine based on that allure.

After the 1970s, Playboy began to fade. Hefner was forced to let go of trappings such as a private jet with a bedroom, a miniature disco and a kitchen, according to Steven Watts, author of “Mr. Playboy: Hugh Hefner and the American Dream.”

Playboy hired Flanders, former CEO of Freedom Communications and the publisher of the Orange County Register newspaper, as chief executive in 2009. He succeeded Christie Hefner, Hugh Hefner’s daughter, as CEO.

Flanders has cut costs, outsourced the magazine’s production except for its editorial content and struck licensing deals with clothing makers, casinos and clubs.

Hefner, who has been married twice, is going for thirds. In December, he wrote on Twitter that he and his girlfriend Crystal Harris, 24, got engaged.