Investment tycoons Ashton Kutcher, MCR Hotels, and Soho House have sealed a monumental $2.7 billion deal, a development that warrants the attention of all investors.
In an unexpected turn of events, Soho House, the exclusive membership club offering a global portfolio of vacation properties, spas, and coworking spaces, is set to be privatized in a $2.7 billion deal. The deal, announced on Aug. 18, has taken Wall Street by surprise, as it had been more than six months since the company provided any new information about its potential privatization.
At the helm of this investment group is Ashton Kutcher, joined by major financial backers Apollo Global Management and Goldman Sachs Alternatives, alongside MCR Hotels, which is acquiring the company. Long-standing shareholders such as Yucaipa Cos. executive chairman Ron Burkle, Soho House founder Nick Jones, and investor Richard Caring will retain controlling equity interests and continue their involvement. Ashton Kutcher will lead this group of strategic investors, providing new equity capital and joining Soho House’s board.
The deal represents a significant upside to the stock's Friday close of $7.64 a share, with the share price immediately jumping 47% from $4.91 to $7.22 following the announcement. The share price represents an 83% premium over the pre-offer share price of $4.91. However, for investors who are not Soho House shareholders, the upside may be limited, and they may want to consider other beaten-down online property platforms like Airbnb or Marriott Vacations Worldwide.
Soho House's Q1 and Q2 earnings releases gave the same "transaction update," reprinted verbatim, disappointing investors hoping for additional details. This lack of information might make it challenging for new investors to make informed decisions. For Soho House shareholders, it may make sense to sell their shares now, depending on their investment goals and financial situation, as the potential arbitrage may not be substantial enough.
The privatization deal will further expand Soho House’s high-end portfolio. MCR, the third-largest owner-operator of hotels in the U.S., is partnering with Kutcher’s consortium in the deal. MCR's chairman and CEO, Tyler Morse, will also take a seat on Soho House’s board.
Notably, Neil Thomson, with 30 years of experience in the hospitality industry, will be the new CFO of Soho House. The transaction is expected to close in the fourth quarter of this year, with Soho House shareholders receiving $9 in cash per share when the deal closes. As of now, Soho House shares are trading at about $8.80, just 2% below the offer price, indicating a high likelihood of the transaction succeeding.
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