Soho House to go private in $2.7-billion deal, actor Ashton Kutcher to join board

By Aatreyee Dasgupta

(Reuters) -Soho House is going private in a $2.7-billion deal led by New York-based MCR Hotels, capping a turbulent market run and financial struggles that erased nearly half of the high-end members club operator's value since its 2021 debut.

Its shareholders will get $9 per share, a 17.8% premium to the last closing price. Soho shares shot up more than 15% after the announcement and were changing hands for around $8.80 in early afternoon trading.

Actor and tech investor Ashton Kutcher will also join Soho's board following the deal, and hospitality veteran Neil Thomson will succeed Thomas Allen as chief financial officer immediately.

"However, Soho House will need a bit more than celebrity stardust to cement its long-term future," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"Its rapid expansion in recent years has sparked concerns that its 'exclusive' label was wearing thin", while the wider consumer spending pullback in the hospitality industry has added pressure as Soho relies on in-house purchases such as meals and entertainment, Streeter said.

Soho was started by restaurateur Nick Jones in 1995 on London's Greek Street above his restaurant, Cafe Boheme, as a meeting place for creative people. The club now has operations across Europe, North America, and Asia.

But less than three years after listing in New York, Soho started exploring the idea of going private as it struggled to turn a profit despite growth in membership and revenue.

Hedge fund manager Daniel Loeb, whose firm Third Point owns a nearly 10% stake in Soho, and who has been pushing for a "fair" sale process, on Monday told Reuters he is pleased with the planned move and supports the deal.

"As both a shareholder and Soho House member, I support this transaction and am pleased to see management of the club in good hands," Loeb said.

Under the new deal, MCR Hotels will get Soho's publicly traded shares, while founder Nick Jones and Executive Chairman Ron Burkle and his investment firm Yucaipa will retain majority control of the business. 

Burkle's Yucaipa and founder Jones collectively own about three-quarters of the company.    

Funds managed by affiliates of Apollo Global Management are supporting the deal through hybrid capital financing, Soho said. 

Apollo CEO Marc Rowan said this month he expects hybrid financing, a mixture of debt and equity, to be the firm’s fastest-growing business segment. 

Apollo partner Reed Rayman told Reuters those structures were allowing Apollo to expand its portfolio.

"Hybrid allows us to participate in situations where Apollo as a firm would never have participated," Rayman said. 

Apollo's contribution to the deal is worth around $850 million in debt and equity, a person familiar with the matter said. 

(Reporting by Aatreyee Dasgupta in Bengaluru and Svea Herbst-Bayliss, Isla Binnie and Abigail Summerville in New York, additional reporting by Purvi Agarwal; Editing by Jan Harvey, Devika Syamnath, Rod Nickel)