The members’ club chain Soho House has agreed a $2.7bn (£1.9bn) deal to take it private after a tricky four years listed on the New York stock exchange.
New York-based MCR Hotels will lead new equity investors in the chain of clubs as part of a deal that will involve it ditching its stock market listing.
Actor turned startup investor Ashton Kutcher – who is thought to have been a longstanding member – will also join Soho House’s board of directors, while the MCR chief executive, Tyler Morse, will be vice-chair.
Soho House was founded in 1995 with a single club in the central London area from which it takes its name. It was founded by the restaurateur Nick Jones, who has a 5% stake, although the biggest investor is the US retail billionaire Ron Burkle, who holds 40% of the company. Richard Caring, the owner of the Ivy restaurant chain, has a 21% stake. All three will retain their stakes, as will the US investment bank Goldman Sachs, which has 8%.
The new investors will pay $9 a share for about 15% of the Soho House & Co shares that trade publicly. The company said the deal implied an enterprise value of about $2.7bn, although that included $700m of debt.
The offer leaves the value of its shares – at about $2bn – well below the $2.8bn level it achieved shortly after listing in 2021. The company has traded below $9 a share since May 2022, although it said that offer represented an 83% premium to the price before investor interest was revealed in December.
MCR Hotels is the third-largest hotel operator in the US, with more than 150 sites including the High Line hotel and the TWA at JFK airport, both in New York. It is converting the BT Tower in London’s Fitzrovia into a hotel, after reaching a deal last year to buy it for £275m.
Soho House operates 10 locations in London, and 48 that are either open or planned around the world, ranging from Paris and Istanbul to Bangkok and Mumbai. It has four clubs in Los Angeles and three in New York. While it is listed in New York, its main office is in London.
It attracts a celebrity clientele, with Kate Moss, Kendall Jenner and Ellie Goulding among those spotted at its clubs. The Duke and Duchess of Sussex, Harry and Meghan, met on a blind date in 2016 at its 76 Dean Street house in London.
However, the company has had to balance the rapid and expensive global expansion of the chain with the difficulty of retaining the feeling of exclusivity demanded by the 270,000 members who must pay an annual fee of up to £2,920 a year for access to every property.
Its share price has dropped from above $14 in August 2021 to $7.64 on Friday. The company has lost a cumulative $739m in the four years it has been listed, although it has made a net profit in its past three quarters.
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Its struggles have attracted attention from activist investors who push for improvements in companies. Third Point, the hedge fund run by the billionaire Dan Loeb, had argued that Soho House should seek other investors to try to push for a competitive bidding process.
The Wall Street short sellers GlassHouse had previously raised concerns about Soho House’s accounting, although these were rejected by the company.
Andrew Carnie, the chief executive of Soho House & Co, said the deal “reflects the strong confidence our existing and incoming shareholders have in the future of Soho House & Co”, despite a “backdrop of challenging economic conditions and global uncertainty”.
The company argues that it has become a more efficient business in the past two years, allowing it to increase in size more profitably. Revenue has doubled in the past three years.
“Returning to private ownership enables us to build on this momentum, with the support of world class hospitality and investment partners,” Carnie said. “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.”