Soho House to Go Private in Major Deal
Soho House, known for its celebrity clientele including figures like Harry and Meghan Markle, has announced plans to go private in a deal valued at $2.7 billion.
MCR Hotel is spearheading the acquisition, proposing $9 per share for the outstanding shares of Soho House. This announcement prompted a 15.5% increase in Soho’s stock, bringing it to $8.82 in early trading on Monday.
Following the deal, actor and tech investor Ashton Kutcher will join Soho’s board, while Neil Thomson is set to take over as chief financial officer from Thomas Allen.
Billionaire Ron Burkle, who has held a controlling stake since 2012, will maintain his majority share in the newly formed company along with other insiders, as reported by the Wall Street Journal.
Apollo Global Management is providing over $700 million in equity and debt financing to finalize the transaction. The private equity firm, which manages assets exceeding $600 billion, has confirmed its involvement in the deal.
Activist investor Daniel Loeb, who disclosed nearly 10% of the stock in January and initially pushed for a $9 share offer, expressed his support for the acquisition, which he believes will benefit shareholders and enhance club management.
The total offer values Soho House around $2.8 billion, excluding debt, which marks a significant decline from its $14 public offering debut in 2021.
Founded in London in 1995, Soho House expanded to New York in 2003, building an aura of exclusivity closely associated with its celebrity connections. The Manhattan location gained fame from a memorable episode of “Sex and the City,” where a character was turned away at the door.
Today, the club boasts over 200,000 members across 46 global locations, charging thousands in fees. While younger applicants pay reduced rates, traditional dress codes often exclude suits and ties, and some artists have traded their works for memberships.
However, rapid growth has somewhat diluted the brand’s allure, leading members to voice complaints about service delays and difficulties in securing poolside reservations.
Executives suggest that expanding to new locations can help maintain exclusivity without overcrowding existing spaces. In 2023, Soho reported a robust retention rate of 91.5% and a near 16% year-on-year increase in membership revenue, totaling $118.6 million in the second quarter.
The MCR hotel group, which operates 30,000 rooms nationwide, is also on the rise with prominent properties, including the Royalton near Times Square and a hotel at JFK airport.
This news has prompted inquiries to Soho House, MCR Hotels, Burkle, and Loeb for further comments.
As Soho House transitions to a private model, the focus will likely shift to monitoring quarterly revenue while pursuing long-term growth strategies in an evolving market.
