Steel Partners willing to pay a premium over the market price

New Frontier Media, a rising star in the tiny world of publicly traded porno companies, said a financial investor has approached it about leading a management buyout.

The Boulder, Colo.-based owner of the Erotic Networks (TEN) — the major rival to Playboy Enterprise’s video biz — said in an SEC filing that Warren Lichtenstein’s activist hedge fund Steel Partners told the board he was willing to pay a premium over the market price. But he apparently declined to give a specific figure when he met with directors earlier this month.

New Frontier shares shot up nearly 7.5% Wednesday on the news to close at $8.48. Wall Streeters believe the overture puts the company in play.

New Frontier is highly profitable and cash rich. It’s also been piquing investor interest as its harder core fare grabs market from Playboy which has been slashing costs and recently announced glum second quarter results.

Steel Partners, which invests in companies it thinks are undervalued, had been buying New Frontier stock for more than a year.

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