Morgans Hotel Group, SBE merger talks break down

Activist shareholder Jason Kalisman helped scuttle the Ron Burkle-backed deal

TRD MIAMI /
Nov.November 05, 2015 05:30 PM

From the New York website: Merger negotiations between the Morgans Hotel Group and Sam Nazarian’s SBE Entertainment broke down Thursday in the face of strenuous opposition to the deal from within the hotelier’s organization.

The talks broke down over a heated disagreement between Ronald Burkle, a preferred-equity holder in Morgans, and Jason Kalisman, a member of the company’s board and manager of OTK Associates, Morgans’ largest shareholder.

Burkle, a strong proponent of the deal, would have become chairman of the combined firm. He would also have acquired two of Morgans’ hotels in the deal: the Delano in Miami and the Hudson Hotel at 356 West 58th Street in Midtown. The hotels would have been valued at $590 million in that transaction.

Kalisman, the company’s former interim CEO and grandson of real estate mogul Alfred Taubman, opposed the deal, saying in a letter to the board that it ceded too much control of the company to Burkle, the Wall Street Journal reported.

The two men have been jockeying for control of the troubled firm for years. Back in 2013, Burkle said in a regulatory filing that Kalisman was “acting like a spoiled child” and “playing with the company as though it’s your new toy.”

The merger would have created a company, to be called SBE-Morgans, with a market capitalization of $260 million. Nazarian — whose firm manages various entertainment and hospitality brands like Katsuya restaurants, the Abbey nightclub in West Hollywood and SLS Hotels — would have become CEO.

Morgans, currently valued at about $120 million with $500 million in debt, owns hotel brands like Mondrian and Delano.

Over the summer, another activist investor in the company, Gregory Cohen of Rambleside Holdings, blasted the then-secret negotiations, saying Morgans was being undervalued.

In September, he placed an offer to buy the same two hotels from the firm at a price of $507 million. [WSJ]Ariel Stulberg

 

Related Articles

arrow_forward_ios
Miami Beach Mayor Dan Gelber and City Manager Jimmy Morales (Credit: Nicholas Hunt/Getty Images, and Mike Coppola/Getty Images)

Miami-Dade targets June 1 opening date for hotels, beaches following Miami Beach vote

Miami-Dade targets June 1 opening date for hotels, beaches following Miami Beach vote
Florida Keys

Florida Keys to reopen to visitors June 1

Florida Keys to reopen to visitors June 1
From left: Jeff Soffer, Brian Kingston of Brookfield Property Partners, Brett Mufson and Diplomat Beach Resort Hollywood

Jeffrey Soffer’s $800M Diplomat resort purchase called off

Jeffrey Soffer’s $800M Diplomat resort purchase called off
Jeff Greene and a rendering of 550 North Quadrille Boulevard (Credit: Arquitectonica International via Facebook)

Billionaire Jeff Greene battles with WPB mayor over unfinished office building

Billionaire Jeff Greene battles with WPB mayor over unfinished office building
Ocean Drive after most visitors have checked out of their hotels in a citywide effort to contain COVID-19. (Credit: Joe Raedle/Getty Images)

How badly are SoFla retailers and hotels suffering from Covid-19?

How badly are SoFla retailers and hotels suffering from Covid-19?
Four Seasons Resort Palm Beach and Carillon Miami Wellness Resort

Carillon Miami Beach, Four Seasons Palm Beach furlough 550 employees

Carillon Miami Beach, Four Seasons Palm Beach furlough 550 employees
Eden Roc and Benihana

Eden Roc Miami Beach, Benihana lay off hundreds in South Florida

Eden Roc Miami Beach, Benihana lay off hundreds in South Florida
From top left, clockwise: Palms Hotel and Spa, Circa 39 Hotel, the Richmond hotel and Hard Rock Cafe Miami

The Palms, Shvo’s Miami Beach hotels, and Hard Rock Café lay off hundreds

The Palms, Shvo’s Miami Beach hotels, and Hard Rock Café lay off hundreds
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...