Sam Nazarian’s SBE to acquire Morgans Hotel Group

Miami /
May.May 09, 2016 06:30 PM

From the New York website: Six months after merger talks collapsed between Sam Nazarian’s SBE Entertainment Group and beleaguered hotel manager Morgans Hotel Group, the two sides have agreed to a deal that will see SBE acquire Morgans for $2.25 per share.

The deal values Morgans at roughly $82 million in equity value and will create a hotel management company with a total enterprise value of around $800 million, the Wall Street Journal reported.

Nazarian, founder and CEO of Los Angeles-based SBE, will serve as chief executive and retain majority control of the combined company. Private equity investor Ron Burkle, who holds a $75 million preferred equity stake in Morgans, will obtain a 25 percent common equity interest in SBE.

SBE will acquire all of Morgans’ hotel management brands – including the Mondrian and the Delano brands – as well as ownership of the Hudson New York in Midtown and the Delano South Beach, the two remaining hotel assets that Morgans still owned. Combined, the new firm will own or operate 20 hotels globally.

“We are pleased to have arrived at a transaction that we believe is in the best interests of our shareholders, while providing a great home for our attractive assets under a renowned hospitality company in SBE,” Howard Lorber, chair of Morgans, said in a statement.

Merger talks between SBE and Morgans collapsed in November after Burkle and former Morgans CEO Jason Kalisman – whose OTK Associates is Morgans’ largest shareholder – disagreed over terms of the deal.

But with an agreement now reached with SBE, Morgans – which was founded by developer and Studio 54 impresario Ian Schrager, and is often credited with innovating the “boutique” hotel sector – may well receive fresh impetus after struggling in recent years.

The company’s share price fell over the past year, hitting a low of $0.79 per share in February, while shareholder infighting – particularly between Burkle and Kalisman – spilled over into the public realm.

Morgans shares jumped significantly in wake of news of the deal, and closed trading Monday up 10 percent at $2.10 per share. [WSJ]Rey Mashayekhi


Related Articles

arrow_forward_ios
A photo illustration of Icon on 8's planned short-term rental hotel along with the current site at 930-950 Southwest 8th Street in Little Havana (Getty Images, Icon on 8, Google Maps)
LA developer plans Little Havana short-term rental hotel
LA developer plans Little Havana short-term rental hotel
Developer Jeffrey Soffer and the JW Turnberry resort at 19999 West Country Club Drive in Aventura (Getty, TripAdvisor)
Jeffrey Soffer’s Turnberry Isle resort scores $412M refi from Bank of China
Jeffrey Soffer’s Turnberry Isle resort scores $412M refi from Bank of China
Frank Pellegrino Jr. with Loews Miami Beach and Loews Hotel owner Jonathan Tisch (Rao's, Google Maps, Getty)
Iconic NYC eatery Rao’s to open at Loews Miami Beach
Iconic NYC eatery Rao’s to open at Loews Miami Beach
G6 Hospitality CEO Rob Palleschi and the Motel 6 at 825 East Dania Beach Boulevard (LinkedIn, Google Maps)
Blackstone sells five South Florida budget hotels for $61M
Blackstone sells five South Florida budget hotels for $61M
Hyatt CEO Mark Hoplamazian and Gencom Founder and Principal Karim Alibhai with a rendering of the proposed three-tower development at 400 Southeast Second Avenue (James L. Knight Center) (LinkedIn, Gencom, Arquitectonica)
Hyatt, Gencom score Miami commission approval for James L. Knight Center referendum
Hyatt, Gencom score Miami commission approval for James L. Knight Center referendum
NR Investments' Ron Gottesmann and Nir Shoshani (top) and a rendering of  the development in Allapattah (NR Investments, DPZ CoDesign)
NR Investments wants to build mixed-use complex in Miami’s Allapattah
NR Investments wants to build mixed-use complex in Miami’s Allapattah
Domenic Gatto and Banyan Cay Resort and Club (Linkedin, Banyan Cay, Illustration by The Real Deal with Getty)
Developers of troubled West Palm resort project facing $61M foreclosure
Developers of troubled West Palm resort project facing $61M foreclosure
Jamestown CEO Matt Bronfman and the 727 Collins Apartments at 727 Collins Avenue in Miami Beach (Getty, Google Maps, Jamestown)
Former low-income South Beach apartments hit market as possible hotel conversion
Former low-income South Beach apartments hit market as possible hotel conversion
arrow_forward_ios

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

Loading...