Going public wasn’t meant to be for the world’s best-known chain of exclusive members-only clubs.
After several years of industry rumor, Soho House officially has plans to return to being a private enterprise via a deal first teased last December.
While Soho House & Co. Executive Chairman Ron Burkle and the Yucaipa Cos. LLC will retain majority control of the company, MCR Investors and its chairman and CEO Tyler Morse — known for the TWA Hotel at New York City’s John F. Kennedy International Airport and a planned transformation of London’s BT Tower into a hotel — will acquire remaining shares of Soho House not held by significant shareholders.
Stockholders of Soho House & Co. will receive $9 per share in cash — a premium over the stock’s $7.60 closing price on Friday but below the $14 price per share when Soho House went public in 2021. The overall deal, including debt, is valued at $2.7 billion, per Soho House. Apollo Global Management is behind more than $700 million in equity and debt financing to the deal, the Wall Street Journal reports.
It appears the deal also halts activist investor Dan Loeb’s campaign to seek higher bids, as he previously called the $9-per-share offer a “sweetheart deal.”
“MCR’s investment in Soho House represents a strategic opportunity to combine our operational expertise with one of the most distinctive brands in hospitality,” Morse said in a statement. “Our shared goal is to safeguard the member experience, drive sustainable international growth for House members, and protect and expand the cultural and creative foundation that has made Soho House a global industry leader.”
While there was much hype for Soho House to go public, losses mounted as the stock price bounced around, and industry experts have flagged quarterly reports didn’t help the brand and its uneven growth.
Wall Street thrives on rooms and property growth whereas a brand like Soho House excels on its reputation of exclusivity — seemingly putting the brand at odds with stock market expectations for players in hospitality.
That said, Soho House recently notched its third straight quarter of profitability. Further, the brand has continued to see its membership count and waitlist of those vying to become a member hit records — showing the brand hasn’t lost its appeal since gaining mainstream notoriety after an episode of “Sex and the City” depicted Kim Cattrall’s Samantha Jones getting rebuffed for membership aspirations.
“We’ve expanded our global footprint, welcoming new members into Houses in creative and culturally important cities such as São Paulo, Mexico City, Nashville, and Paris — while continuing to build strong connections with members and invest in Houses that we’ve called home for many years,” Soho House CEO Andrew Carnie said in a statement. “Behind the scenes, we’ve embarked on a significant transformation of our finance and operational systems, giving us the tools to scale efficiently and position the business for long-term success.”
“Returning to private ownership enables us to build on this momentum, with the support of world class hospitality and investment partners,” Carnie added.