After adopting the more innocuous name of a company it acquired last year, “FriendFinder Networks,” Penthouse Media Group filed for a $460 million IPO on Tuesday.

Penthouse bought FriendFinder– which runs sites that help subscribers find friends of all sorts, from FrenchFriendFinder.com for those interested in working on their French, to hook-up sites AdultFriendFinder and BigChurch.com, a site for single Christians –for $500 million a year ago.

The idea was to tap into the online adult market and become less of a publishing company than an internet company. The purchase also included popular video chat site cams.com, an adult site which helps new friends connect visually.

In March, Penthouse had said it planned to raise $250 million in an IPO in the second quarter. But as the IPO market floundered in the second half of 2008, those plans got scuttled.

FriendFinder joins a pipeline of IPOs facing a harsh climate. But this IPO in particular faces two major challenges, despite the old adage that sex sells: the proceeds will be used largely to pay off debt, something investors generally resist, and arch-rival Playboy has seen its shares wilt in 2008,  falling 78 percent.  What’s more FriendFinder Networks’ profits fell more than 20 percent between 2006 and 2007.

Still, social networking sites remain popular- in its SEC filing, FriendFinder claims to have 270 million members, who presumably need companionship, even in a recession.

The 2008 M&A numbers are in and they tell a sad story.

Global merger volume dropped by almost a third and ended five years of deal growth as a lack of available credit, plunging stock markets and a worldwide financial crisis undermined companies’ ability to make acquisitions.

More deals were withdrawn in the year than ever before, with more than 1,100 transactions cancelled compared with just under 800 in 2007, according to Thomson Reuters data.

And the few big deals that did take place, shaped the rankings of merger advisers.

Some think things can only get better.  

“What drove the cancellations was unexpectedly dramatic gyrations in various markets — credit markets, stock markets. That has already happened,” said James Stynes, global chairman of mergers and acquisitions at Deutsche Bank Securities.

“People will strike deals with the knowledge that credit is extraordinarily scarce and the market is very volatile. They will anticipate that, and therefore deals that get struck are more likely to be structured in a way that they take these issues into account,” he said.

DEALS OF THE DAY

** Movie mogul Run Run Shaw plans to buy out his listed unit, Shaw Brothers (Hong Kong) , for $172 million after he failed to sell his stake in the firm, propelling the stock as much as 58 percent higher.

** Russian fertiliser producer Acron said it has acquired a Chinese distribution company for an undisclosed amount in order to expand in the market there.

** San Miguel, Southeast Asia’s largest food and beverage group, said it was close to buying a dominant stake in Philippine oil refiner Petron, its first foray into the petrol business.

** Morgan Stanley’s private equity unit said it invested 1.82 billion rupees ($37.5 million) in unlisted Indian castor oil maker Biotor Industries, to mark its first private equity investment in India.

** Switzerland’s tour operator Kuoni said it had acquired the whole of Cotravel for an undisclosed amount.

(Photo credit: David Gray, Reuters)