News Summary
Soho House, the renowned private members’ club chain, is set to transition to private ownership in a $2.7 billion deal led by MCR Hotels. New investors will acquire around 15% of the company’s shares at a significant premium. The acquisition, pending approval, is expected to finalize by mid-February and will bring notable changes to the board, including the addition of a celebrity investor. Founded in 1995, Soho House has expanded globally, but faced financial difficulties since going public, reporting substantial losses despite recent profitability.
New York City – Soho House, a popular private members’ club chain, has announced a significant transition, agreeing to a $2.7 billion deal to go private after four years on the New York Stock Exchange. The acquisition will be led by MCR Hotels, a New York-based firm that is recognized as the third-largest hotel operator in the United States, in partnership with a group of new equity investors. Once the deal is finalized, Soho House will no longer be publicly traded.
Under the terms of the acquisition, new investors will purchase approximately 15% of Soho House’s publicly traded shares at $9 per share. This price represents an 83% premium over the company’s share price prior to the announcement of investor interest in December. The current valuation of $2.7 billion includes a significant debt component of $700 million.
The transaction is set to close by mid-February, contingent on shareholder and regulatory approvals. Noteworthy changes to the board will occur post-acquisition, with actor and startup investor Ashton Kutcher joining as a board member. In addition, Tyler Morse, the CEO of MCR Hotels, will take on the role of vice-chair on the board of Soho House.
Founded in 1995 by restaurateur Nick Jones, the first Soho House was established in London and has since expanded globally to operate 10 clubs in London and 48 locations worldwide, which include cities like Los Angeles, New York, Paris, Istanbul, Bangkok, and Mumbai. Currently, Soho House boasts 213,000 members, with annual membership fees reaching up to £2,920.
Despite its global presence and extensive membership, Soho House has faced financial challenges since going public. The company has reported a cumulative loss of $739 million since its market debut, although it has achieved profitability in the last three quarters. Prior to the acquisition announcement, the shares have struggled, trading below $9 since May 2022 and dropping from over $14 in August 2021.
Significant ownership stakes in Soho House include billionaire Ron Burkle with a 40% stake, Richard Caring, who possesses 21%, and Goldman Sachs, holding an 8% stake. The company must balance maintaining its exclusive brand while strategically managing its expansion efforts moving forward.
In recent years, Soho House has navigated scrutiny from activist investors and faced challenges related to accounting concerns raised by short sellers, which the company has rejected. However, CEO Andrew Carnie expressed confidence in shareholder commitment to the company’s future as they enter this new chapter.
MCR Hotels’ reputation as a leading hotel operator is exemplified by notable holdings such as the TWA Hotel and the High Line Hotel in New York. MCR is also engaged in transforming the BT Tower in London into a hotel, showcasing its commitment to innovative hospitality ventures.
With the financing of the acquisition being supported by Apollo through a hybrid capital solution containing both debt and equity financing, Soho House plans to leverage this new investment to further enhance member experiences and facilitate its continued expansion in the highly competitive private club sector.
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Additional Resources
- The Guardian
- Wikipedia: Soho House
- Reuters
- Google Search: Soho House
- Skift
- Encyclopedia Britannica: Soho House
- Wall Street Journal
- Google News: Soho House MCR Hotels
- Business Wire
- Google Scholar: Soho House
- Investing.com
Author: STAFF HERE NEW YORK WRITER
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