Soho House returns to private ownership: close to a $1.8 billion buyout deal

Soho House, once an ambitious London club that transformed exclusivity into a global business, is preparing to exit public markets as part of a deal orchestrated by one of the largest American hotel owners, UNN reports with reference to the Financial Times.

Details

A group of investors led by New York-based MCR Hotels, which owns 30,000 guest rooms across the US, including the 1960s-style TWA Hotel at JFK Airport, is close to finalizing a deal to buy out Soho House shares from the remaining public shareholders at a price of about $9 per share, sources familiar with the situation said.

As part of the offer to sell shares on a private exchange, the company is valued at approximately $1.8 billion excluding debt, providing investors with a premium to Friday's closing price of $7.60, although it is still significantly lower than the $14 price when Soho House went public in 2021. The deal could be announced as early as this week.

Ron Burkle, the billionaire club sponsor who has long controlled the group, will roll over his stake along with other existing investors, sources familiar with the matter said.

Apollo Global Management, an alternative asset manager, is expected to provide more than $800 million in debt and equity financing, the sources added.

Soho House's decision to privatize came after the company faced difficulties in the public offering market.

Last year, New York-based short-seller GlassHouse criticized what it called a "dysfunctional business model and terrible accounting," stating that the group's expansion into less affluent cities betrayed its brand and concealed the fact that it had never made a profit in 28 years.

Management responded with an independent review, which, according to management, found no "material issues" in the company's accounting.

Over the past few quarters, the company has shown signs of improvement. Earlier this month, the company reported its third consecutive quarterly profit.

The Wall Street Journal first reported on the potential transaction.

For reference

Soho House has member clubs across Europe, North America, and Asia, as well as restaurants, cinemas, workspaces, spas, and bedrooms.