(Reuters) -Soho House is going private in a $2.7 billion deal led by New York-based MCR Hotels, capping a turbulent market run and financial struggles that erased nearly half of the high-end members club operator’s value since its 2021 debut.
Shareholders of Soho will get $9 per share, a 17.8% premium to the closing price on Friday. Its shares shot up 16% in premarket trading to $8.86 after the company’s Monday announcement.
Actor and tech investor Ashton Kutcher will also be joining Soho’s board following the deal, and the company named hospitality veteran Neil Thomson as chief financial officer to succeed Thomas Allen effective immediately.
Hedge fund manager Daniel Loeb, whose firm Third Point invested in Soho House, and who has been pushing for a “fair” sales process, on Monday told Reuters he is pleased with the planned move and supports the deal.
Soho was started by restaurateur Nick Jones in 1995 on London’s Greek Street above his restaurant, Cafe Boheme, as a meeting place for creative people. Known for its stylish interiors and exclusivity, the club now has operations across Europe, North America and Asia.
But less than three years after going public, Soho formed a special board committee to explore taking the company private, as the high-end club struggled to turn a profit despite growth in membership and revenue.
Under the new deal, MCR Hotels will get Soho’s publicly traded shares, while founder Nick Jones and Executive Chairman Ron Burkle and his investment firm Yucaipa will retain majority control of the business.
Loeb said that “as both a shareholder and Soho House member, I support this transaction and am pleased to see management of the club in good hands”. Third Point owns a nearly 10% stake in Soho.
The billionaire investor had said other parties with experience investing in the hospitality sector may be interested in the asset. He had also called the $9-a-share offer a “sweetheart” deal and pointed to Burkle’s “conflicts of interest and undue influence on the board”.
Burkle’s Yucaipa and founder Jones collectively own about three-quarters of the company.
Loeb’s Third Point did not immediately return a Reuters request for comment on Monday.
Funds managed by affiliates of Apollo Global Management are supporting the deal through hybrid capital financing, Soho said. The Wall Street Journal had reported on Sunday that Apollo was expected to provide more than $700 million in equity and debt financing for the deal.
(Reporting by Aatreyee Dasgupta in Bengaluru and Svea Herbst-Bayliss in New York; Editing by Devika Syamnath and Jan Harvey)
