MCR Hotels’ planned deal to take Soho House private may be on thin ice, with MCR now unable to meet its funding commitments by the anticipated closing date, according to a Jan. 8 filing with the Securities and Exchange Commission.
Soho House & Co. first announced the merger in August, sharing that a group of investors led by New York-based MCR Hotels and its CEO and chairman, Tyler Morse, would take the membership club private in a deal valued at $2.7 billion.
The investor group was expected to acquire outstanding shares of Soho House, as existing shareholders Soho House Executive Chairman Ron Burkle and the investment firm Yucaipa Companies rolled their controlling equity interests into the membership club company and retained majority control of the business.
In line with the merger agreement, MCR committed to purchase $200 million worth of Soho House shares, priced at $9 per share, at or before the closing of the merger, according to the Jan. 8 SEC filing. On Jan. 5, though, MCR informed Yucaipa that it would not be able to fund its closing commitment.
According to the filing, “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,” with numerous options being pursued. However, “there can be no assurance that such efforts will be successful,” per the filing.
In August, Morse said the merger represented a strategic opportunity to combine MCR’s operational expertise with “one of the most distinctive brands in hospitality.” In line with the deal, Morse was slated to join Soho House’s board of directors as vice chairman, according to a company press release.
Soho House has roughly 46 Soho House locations globally, with U.S. properties in New York; Austin, Texas; Chicago; Portland, Oregon; Nashville, Tennessee; Los Angeles; and Miami.
Both MCR and Soho House could not be reached for comment.
