Soho House, an exclusive high-end members’ club operator, is poised to transition to private ownership through a significant $2.7 billion deal spearheaded by MCR Hotels, a hotel investment firm based in New York. This decision is a response to a tumultuous market environment and persistent financial challenges.
Under the terms of the deal, shareholders will receive $9 for each share they hold, which represents a 17.8% premium over Soho’s last closing price. Following the announcement of the deal, shares of Soho House experienced a notable increase.
In a development related to the company’s leadership, actor and tech investor Ashton Kutcher is set to join Soho House’s board following the completion of the transaction. Additionally, hospitality industry veteran Neil Thomson will assume the role of Chief Financial Officer immediately, succeeding Thomas Allen. Thomson’s expertise is expected to help steer the company through its new phase of private ownership.
Soho House was initially established by restaurateur Nick Jones in 1995. The inaugural club was located on London’s Greek Street, above his restaurant, Café Boheme, and was intended to serve as a collaborative space for creative minds across various fields. Since its inception, Soho House has expanded its footprint significantly. It now operates a diverse range of locations throughout Europe, North America, and Asia, catering to a discerning clientele drawn to its distinctive ambiance and offerings.
Despite its substantial growth in membership and revenue, the company has faced significant hurdles in achieving profitability since its initial public offering (IPO), prompting its management team to reconsider its market position less than three years after the IPO. The exploration of privatization options indicates a strategic shift aimed at refocusing on operational efficiency and long-term growth.
As part of the deal, MCR Hotels will acquire all of Soho House’s publicly traded shares. Meanwhile, founder Nick Jones and Executive Chairman Ron Burkle, along with his investment firm Yucaipa, will maintain majority control over the business, ensuring that the original vision of Soho House continues under its current leadership team.
Advisors: Citi is serving as financial advisor to the Company and Sidley Austin is serving as legal counsel to the company. Morgan Stanley is serving as financial advisor to the Special Committee and Fried, Frank, Harris, Shriver & Jacobson and Morris, Nichols, Arsht & Tunnell are serving as legal counsel to the Special Committee. Gibson, Dunn & Crutcher is serving as legal counsel to the Apollo Funds. Canaccord is serving as financial advisor to MCR. Herbert Smith Freehills Kramer is serving as legal counsel to Richard Caring. LionTree is serving as financial advisor to Ashton Kutcher.
KEY QUOTES:
“After detailed consideration by the Special Committee with the assistance of our outside financial and legal advisors, we determined that the $9.00 per share in cash consideration delivers meaningful and immediate value to stockholders. We look forward to working with the teams at the Company and the various financing sources to complete the merger.”
Eric Deardorff, Chairman of the Special Committee
“This transaction reflects the strong confidence our existing and incoming shareholders have in the future of Soho House & Co., and the transformation we’ve led since becoming a public company. Since our IPO in 2021, we’ve focused on building a stronger, more resilient business. Against a backdrop of challenging economic conditions and global uncertainty, from 2022-2024 we delivered consistent, disciplined growth with revenue increasing at an average annual rate of double digit growth, and Adjusted EBITDA growing at over 50% annually during the same period.”
“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. 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. I’m incredibly proud of what our teams have accomplished and am excited about our future, as we continue to be guided by our members and grounded in the spirit that makes Soho House so special.”
Andrew Carnie, CEO of Soho House & Co
“Soho House is a place of creative connection, where freedom of expression and character thrive. All of us at MCR are excited to be part of the Soho House journey, helping to create more experiences, interactions and memories alongside friends and members. We have long admired Soho House for bringing together cultures from around the world into a global network of 46 Houses, and we look forward to the continued growth of that fabric, starting with four new Houses opening soon.”
“MCR’s investment in Soho House represents a strategic opportunity to combine our operational expertise with one of the most distinctive brands in hospitality. 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. Together, we are confident in our ability to deliver long-term value for members, employees and shareholders alike.”
Tyler Morse, Chairman & CEO of MCR
“Soho House is a globally renowned brand with a talented management team and exciting growth prospects. We are pleased to leverage our scale and flexibility to provide a highly customized capital solution to support this transaction. This is a prime example of Apollo’s hybrid capital at work, flexing across both debt and equity and working closely with the Company and its investors to craft a structured solution at scale.”
Reed Rayman, Partner and Deputy Head of Hybrid at Apollo
“We look forward to our continued partnership with Soho House. The company has established itself as a leading global membership platform, with a differentiated offering and strong track record. We are excited to support the next stage of Soho House’s development in partnership with its management team and shareholders.”
Beat Cabiallavetta, Global Head of Hybrid Capital at Goldman Sachs Alternatives
