Soho House bought for £1.3bn by US hotel giant

The rooftop pool at Soho House New York. The group’s rapid expansion was accused of hurting its reputation for exclusivity - Soho House

Soho House is ending its tumultuous life on the public markets after agreeing to be taken over by a US hotel giant in a $1.8bn (£1.3bn) deal.

New York-based MRC Hotels, which last year bought London landmark the BT Tower, is leading a group of investors that will snap up the chain of members’ clubs.

The $9-per-share deal, which values Soho House at around $1.8bn, represents an 83pc premium compared to the company’s stock price at the end of last year. However, it is well below the $14-per-share price Soho House floated on the New York stock market in 2021.

Other investors in the deal to take the company private include Apollo Global Management and Goldman Sachs, as well as a consortium led by actor Ashton Kutcher.

Ron Burkle, the billionaire Soho House chairman, will roll over his existing stake under the terms of the transactions, as will founder Nick Jones and restaurateur Richard Caring.

Tyler Morse, MCR’s chief executive, will become deputy chairman of Soho House, while Mr Kutcher will also join the board.

In a note to members seen by The Telegraph, Andrew Carnie, Soho House chief executive, said: “Over the past four years we’ve built a really strong business and given members more to enjoy morning, noon and night, while being thoughtful about how and where we grow.

“By going private, we’re building on this momentum alongside new partners who are some of the world’s most respected investors.

“This next chapter is about taking the best of what we’ve built and making it better for our members around the world, so your membership feels just as special in the years ahead as it does today.”

Tumultuous times

The takeover brings to an end a troubled period on the stock exchange for Soho House, which has grown from a single townhouse on Soho’s Greek Street in 1995 to a global empire of 46 clubs.

The company’s shares have fallen precipitously since listing, prompting Mr Burkle to complain that it had been undervalued by the market.

Soho House has also clashed with New York-based shortseller GlassHouse, which published a damning criticism of the company’s “broken business model and terrible accounting”.

Bosses said the report included “factual inaccuracies, analytical errors and false and misleading statements”.

The company has faced pressure from Third Point, the hedge fund run by activist Dan Loeb, to seek outside investors who would deliver a higher valuation for the business.

Soho House has shown recent signs of a turnaround after posting its first run of consecutive quarterly profits after three decades in the red.

Operating profit stood at just under $60m in the three months to July – up from $35m in the previous quarter – while revenues grew thanks to increased membership and higher in-house food and drink sales.

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Under Andrew Carnie, Soho House has been looking to refocus its efforts on quality - Eddie Mulholland

Under Mr Carnie, Soho House has been looking to refocus its efforts on quality following complaints that the group’s rapid expansion had made its clubs overcrowded and hurt its reputation for exclusivity.

Soho House stopped accepting new members in London, New York and Los Angeles last year. Applications have now reopened, with the group upgrading its food and drink offering, introducing new wellness facilities and refurbishing some of its sites.

The company has also invested more in events and experiences such as its London festival and pop-up hospitality suites at Formula 1 races, while it has recently opened exclusive new outposts including Soho Mews House and Soho Farmhouse Ibiza.

MCR is the third-largest hotel operator in the US with more than 25,000 guest rooms. Its portfolio includes the famous 1960s-themed TWA Hotel at JFK Airport, as well as the High Line Hotel and the Gramercy Park Hotel in New York City.

Soho House on Monday also announced the departure of its chief financial officer, Thomas Allen, after three years.

The former Morgan Stanley analyst has been replaced by Neil Thomson, a veteran restaurant industry executive who formerly held senior roles at Pizza Hut and KFC.

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