Soho House’s $2.7B Privatization Deal Falling Apart

Five months ago, it was announced that members-only club Soho House was going private. Not so fast, apparently.

The deal for MCR Hotels and its leader Tyler Morse to take control of the swanky club is in danger, Hotel Dive reported. Days ago, MCR informed investment firm Yucaipa Companies — which has a controlling interest in the business — that it would not be able to fund its closing commitment, according to an SEC filing.

As part of its $2.7 billion privatization deal, MCR — which owns high-end hospitality destinations like the High Line Hotel and Gramercy Park Hotel — pledged to buy $200 million worth of public Soho House shares at $9 per share by the close of the merger. That price point represented an 18 percent premium on what the stock traded at before the deal was announced, but well below the $14 initial public offering in 2021.

Billionaire Ron Burkle and his Yucaipa entity were set to roll over their existing stake and retain majority control of the new company, according to a press release when the deal was announced.

Morse was set to snag a seat on the board as vice chairman. Actor-turned-investor Ashton Kutcher was part of a group chipping in new equity capital and joined the board, while Apollo Global Management was said to be refinancing roughly $700 million in debt.

Now, everything is up in the air. MCR and Soho House could not be reached for comment by the publication.

Burkle and his firm aren’t throwing in the towel, yet.

“Yucaipa and the Special Committee of the Board of Directors of the Company, together with their respective advisors, are engaging with affiliates of MCR, as well as other parties, to secure the funding,” according to the funding, adding that success was not guaranteed.

Soho House counts 46 locations and more than 200,000 members on its books. The company is credited with leading the wave of members-only clubs that have become a staple of the New York City social scene, snapping up buildings and long-term leases in recent years.

The company, founded in 1995, paved the way for clubs like Casa Cipriani, Zero Bond and Aman New York.

— Holden Walter-Warner