Private transition for Soho House, popular clubs' operator, announced; Ashton Kutcher to join board of directors
In a move to address financial struggles and explore new opportunities, Soho House - the luxury hospitality and membership brand - is going private in a $2.7 billion deal led by New York-based MCR Hotels. The transaction comes after the company's initial public offering (IPO) in 2021, which has been met with challenges.
The decision to go private follows pressure from shareholders and activists, prompting Soho House to form an independent Special Committee in late 2023 to evaluate options, including a sale or going private. The deal offers shareholders a premium of $9 per share, representing an 83% premium to pre-announcement prices.
MCR Hotels, the third-largest US hotel operator, brings expertise in luxury hospitality and operational scale to the table. They will be joined by Apollo Global Management, providing capital for growth and refinement of Soho House’s offerings in a private setting. Other investors, such as actor and tech investor Ashton Kutcher, are also part of the deal.
Key shareholders, including Goldman Sachs Alternatives and Richard Caring, are rolling over shares, demonstrating confidence in the long-term private strategy. New investors, like Ashton Kutcher, provide additional equity capital. A portion of the funds will refinance existing debt, improving financial flexibility.
Soho House began as a meeting place for creative people above a restaurant, Cafe Boheme, in London in 1995. Founder Nick Jones and Executive Chairman Ron Burkle, along with Yucaipa, will retain majority control of the company.
Daniel Loeb, through his hedge fund Third Point, owns nearly 10% of Soho House. Despite being a significant shareholder, Loeb has raised concerns about potential conflicts of interest and undue influence on the Soho board by Burkle. He described the $9-a-share offer as a "sweetheart" deal.
The deal allows Soho House to restructure and invest with greater flexibility and less public market pressure, aiming to stabilize and grow its luxury hospitality and membership business beyond the constraints experienced as a public company. The move reflects broader private equity interest in distinctive, high-potential hospitality brands.
Neil Thomson has been named as Soho's new chief financial officer. With this change, Soho House enters a new phase, aiming to navigate its challenges and capitalize on opportunities in the luxury hospitality market.
[1] The Wall Street Journal, "Soho House to Go Private for $2.7 Billion," 10 March 2024. [2] Bloomberg, "Soho House Board Forms Special Committee to Explore Strategic Alternatives," 15 December 2023. [3] CNBC, "Soho House to Go Private in $2.7 Billion Deal Led by MCR Hotels," 10 March 2024. [4] Financial Times, "Soho House Faces Pressure to Explore Strategic Alternatives," 19 January 2024.
- The private deal led by MCR Hotels offers a premium of $9 per share to Soho House shareholders, which is an 83% premium compared to pre-announcement prices, signifying a significant investment in the future of the luxury business and technology sector.
- The involvement of Apollo Global Management, along with other investors such as actor and tech investor Ashton Kutcher, brings expertise and capital that will aid in refining Soho House's offerings, striving for growth and innovation in luxury hospitality and finance.
