8-K: Soho House Goes Private in $2.7B Deal

Soho House & Co Inc. announced a definitive agreement to be taken private at $9.00 per share, representing an 83% premium, with key shareholders rolling over their equity and new investors joining.

Summary

• Soho House & Co Inc. has entered into a definitive Agreement and Plan of Merger to be acquired by an investor group led by MCR and its Chairman and CEO Tyler Morse.
• Public shareholders will receive $9.00 in cash per share, representing an approximate 83% premium over the closing stock price as of December 18, 2024.
• The transaction implies a total enterprise value of approximately $2.7 billion for Soho House & Co Inc.
• Existing significant shareholders, including Ron Burkle and Yucaipa Companies LLC, will roll their controlling equity interests and retain majority control.
• New equity capital will be provided by MCR, Tyler Morse, and a consortium of strategic investors led by Ashton Kutcher.
• Funds managed by affiliates of Apollo are providing a hybrid capital solution, including debt and common equity, with a portion used to refinance existing Senior Secured Notes.
• Goldman Sachs Alternatives, an existing investor, will continue its financial support and commit additional capital.
• The Special Committee of independent directors unanimously determined the merger to be advisable, fair, and in the best interests of the Company and Unaffiliated Company Stockholders.
• The transaction is expected to close by the end of 2025, subject to regulatory approvals (including HSR Act) and shareholder approval, including a majority vote from Unaffiliated Company Stockholders.
• Upon completion, Soho House & Co Inc.'s Class A Common Stock will be delisted from the New York Stock Exchange and deregistered.

Sentiment

Score: 9

Explanation: The filing announces a take-private transaction at a substantial premium, indicating a highly favorable outcome for public shareholders. The strong backing from existing and new strategic investors, coupled with robust financing, suggests confidence in the company's future and a clear path to completion. Management's positive comments on past performance and future strategy under private ownership further reinforce the positive sentiment.

Positives

• The $9.00 per share cash consideration represents a significant 83% premium to the unaffected share price as of December 18, 2024, offering substantial immediate value to stockholders.
• The transaction is supported by key existing shareholders, including Ron Burkle and Yucaipa, who are rolling over their controlling equity interests, indicating strong internal confidence.
• New strategic investors like MCR and Ashton Kutcher are joining, bringing operational expertise and additional capital.
• Apollo Funds are providing a flexible hybrid capital solution, combining debt and equity, which supports the transaction's financing structure.
• The company reported consistent, disciplined growth from 2022-2024, with revenue increasing at an average annual double-digit rate and Adjusted EBITDA growing over 50% annually.
• Management highlighted significant transformation of finance and operational systems, positioning the business for efficient scaling and long-term success under private ownership.

Risks

• The consummation of the merger is subject to several conditions, including affirmative votes from a majority of outstanding Company Common Stock and a majority of votes cast by Unaffiliated Company Stockholders.
• Regulatory approvals, such as the expiration or termination of the HSR Act waiting period, are required.
• The absence of any law, injunction, judgment, or order prohibiting the merger is a condition.
• The prior or substantially concurrent funding of the Debt Financing is a critical condition.
• The accuracy of the Company's representations and warranties and the absence of a Company Material Adverse Effect are conditions for the Buyer Parties' obligations.
• The Company is subject to customary no-shop restrictions, limiting its ability to solicit alternative acquisition proposals, though a fiduciary out provision exists for superior proposals.
• A Company Termination Fee of $20,000,000 is payable under certain circumstances, including if the Company terminates to enter into a Superior Proposal or if an Acquisition Transaction is consummated within nine months after certain terminations.
• The Buyer Parties' liability for monetary damages for breaches of the Merger Agreement is capped at $10,000,000, and the Company's liability is capped at $20,000,000.

Future Outlook

The company aims to build on its momentum under private ownership, focusing on continued growth, scaling efficiently, and long-term success. It plans to expand its global footprint with four new Houses opening soon, guided by its members and grounded in the spirit of Soho House.

Management Comments

• Eric Deardorff, Chairman of the Special Committee: "After detailed consideration... we determined that the $9.00 per share in cash consideration delivers meaningful and immediate value to stockholders. We look forward to working with the teams... to complete the merger."
• Andrew Carnie, CEO of Soho House & Co: "This transaction reflects the strong confidence our existing and incoming shareholders have in the future of Soho House & Co., and the transformation we've led since becoming a public company."
• Andrew Carnie, CEO of Soho House & Co: "Returning to private ownership enables us to build on this momentum, with the support of world class hospitality and investment partners. I'm incredibly proud of what our teams have accomplished and am excited about our future..."
• Tyler Morse, Chairman & CEO of MCR: "Soho House is a place of creative connection, where freedom of expression and character thrive. All of us at MCR are excited to be part of the Soho House journey, helping to create more experiences, interactions and memories alongside friends and members."
• Tyler Morse, Chairman & CEO of MCR: "Our shared goal is to safeguard the member experience, drive sustainable international growth for House members, and protect and expand the cultural and creative foundation that has made Soho House a global industry leader."
• Reed Rayman, Partner and Deputy Head of Hybrid at Apollo: "Soho House is a globally renowned brand with a talented management team and exciting growth prospects. We are pleased to leverage our scale and flexibility to provide a highly customized capital solution to support this transaction."
• Beat Cabiallavetta, Global Head of Hybrid Capital at Goldman Sachs Alternatives: "We look forward to our continued partnership with Soho House. The company has established itself as a leading global membership platform, with a differentiated offering and strong track record."
• Thomas Allen, outgoing CFO: "I am extremely proud of what we have accomplished as a Company over the past three years, focusing on growing and enhancing membership, and operational excellence to drive profitability. I am confident that we have set up Soho House & Co for long-term sustainable growth."

Industry Context

The take-private transaction for Soho House & Co Inc. highlights a trend of established brands seeking private ownership to navigate challenging economic conditions and focus on long-term strategic growth away from public market pressures. The involvement of a major hotel owner-operator like MCR and a prominent technology investor like Ashton Kutcher suggests a strategic focus on leveraging operational expertise and technological innovation within the hospitality and membership platform sectors. Apollo's hybrid capital solution demonstrates the increasing sophistication of financing structures available for such transactions, reflecting a broader market appetite for customized investment solutions in established, high-growth brands.

Comparison to Industry Standards

• MCR, a new shareholder, is the 3rd largest hotel owner-operator in the United States, with a $5.0 billion portfolio of 150 premium-branded hotels across 31 brands, including iconic assets like the TWA Hotel at JFK Airport, The High Line Hotel, and the Gramercy Park Hotel in New York City, and the BT Tower in London.
• MCR's cloud-based hospitality software assets, Stayntouch (property management system) and Optii (hotel operations software), indicate a focus on technological integration and operational efficiency, which could be a competitive advantage for Soho House.
• MCR has been recognized as one of Fast Company's 10 Most Innovative Travel Companies and by Newsweek as one of America's Greatest Workplaces and America's Greatest Workplaces for Women in 2025, suggesting a strong operational and cultural benchmark.
• MCR's hotels are frequently featured in Travel + Leisure's World's Best Hotels and Condé Nast Traveler's Readers' Choice Awards, demonstrating a commitment to high-quality guest experience comparable to Soho House's luxury brand.
• Apollo, with $840 billion in assets under management as of June 30, 2025, and Goldman Sachs Alternatives, with over $500 billion in assets, represent significant financial backing, comparable to the scale of financing typically seen in major private equity buyouts of established global brands.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions 'Transaction Litigation' as a potential risk, referring to any legal proceeding commenced or threatened by any person against a party or its subsidiaries/representatives in connection with the merger. No specific pending litigation is detailed.

Related Party Transactions

• Certain stockholders, including Ron Burkle and Yucaipa Companies LLC, are designated as 'Reinvestment Stockholders' and have entered into Support Agreements to roll over their controlling equity interests in the Company.
• Richard Caring, Nick Jones, and Goldman Sachs Alternatives, identified as existing significant shareholders, will roll the majority of their shares of common stock.
• Goldman Sachs Alternatives, which has been invested in Soho House since 2021, is committing additional capital to the transaction.
• A portion of the debt financing proceeds will be used to repay certain existing notes owned by affiliates of Goldman Sachs Asset Management L.P. and entities controlled, managed or advised by Goldman Sachs Asset Management L.P. or its affiliates.

Stakeholder Impact

• **Shareholders**: Public shareholders will receive a significant cash premium of $9.00 per share, representing an 83% premium, providing an attractive exit. Certain existing significant shareholders will roll over their equity, maintaining a stake in the private entity.
• **Employees**: The Chief Financial Officer position is transitioning, and a new management incentive plan (MIP) will be established post-merger, offering equity-based awards tied to EBITDA performance, potentially aligning employee incentives with company success. Outgoing CFO Thomas Allen receives a separation package including accelerated RSU vesting.
• **Customers/Members**: The company plans to continue expanding its global footprint with new Houses opening, aiming to safeguard the member experience and drive sustainable international growth.
• **Creditors**: The transaction includes $845 million in debt financing, a portion of which will be used to repay certain existing notes, impacting current creditors.
• **New Investors**: MCR, Tyler Morse, and Ashton Kutcher are becoming shareholders, while Apollo and Goldman Sachs Alternatives are providing significant financing, indicating new strategic partnerships and capital infusion.

Next Steps

• The Company will prepare and file a preliminary proxy statement (Schedule 14A) with the SEC.
• The Company and Parent will jointly prepare and file a Rule 13E-3 Transaction Statement with the SEC.
• A meeting of stockholders (Company Stockholder Meeting) will be convened to obtain the Requisite Stockholder Approval, including a majority vote from Unaffiliated Company Stockholders.
• Regulatory approvals, including the expiration or termination of the HSR Act waiting period, must be obtained.
• The Debt Financing proceeds must be funded prior to or substantially concurrently with the Closing.
• Upon completion of the transaction, the Class A Common Stock will be delisted from the New York Stock Exchange.
• The Class A Common Stock will be deregistered pursuant to the Securities Exchange Act of 1934 as soon as reasonably practicable after delisting.
• The initial directors of the Surviving Corporation will be the directors of the Company as of immediately prior to the Effective Time.
• The initial officers of the Surviving Corporation will be the officers of the Company as of immediately prior to the Effective Time.
• The Company Board will approve the nomination and appointment of individuals listed in Section 6.19 of the Company Disclosure Letter to the Company Board, effective as of the Closing.

Key Dates

Recommendation

The take-private offer presents an immediate and substantial 83% premium to the unaffected share price, offering a compelling cash exit for public shareholders. The transaction is well-supported by key existing and new strategic investors, including significant financing commitments, which de-risks the deal's completion. This represents a highly favorable outcome for current shareholders, making it a strong buy for those seeking to capitalize on the premium.

Keywords

Soho House, SHCO, Take-private, Merger, Acquisition, Hospitality, Private Equity, MCR, Apollo, Goldman Sachs Alternatives, Yucaipa, Ron Burkle, Ashton Kutcher, Membership Platform, CFO Transition, SEC Filing