DEFA14A: Soho House Goes Private in $2.7B Deal, Names New CFO

Soho House & Co Inc. announced a definitive agreement to be taken private at $9.00 per share, representing an 83% premium, while also appointing Neil Thomson as its new Chief Financial Officer.

Summary

• Soho House & Co Inc. (SHCO) has entered into a definitive agreement to be taken private by an investor group led by MCR and its Chairman and CEO Tyler Morse.
• Unaffiliated stockholders will receive $9.00 per share in cash, representing an 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 SHCO.
• Existing significant shareholders, including Executive Chairman Ron Burkle and Yucaipa Companies LLC, will roll their controlling equity interests and retain majority control of the business.
• New equity capital will be provided by MCR and a consortium of strategic investors led by technology investor Ashton Kutcher, both of whom will join the Company's Board of Directors.
• Apollo Funds and Goldman Sachs Alternatives are supporting the transaction through a hybrid capital solution, providing additional capital in the form of debt ($845 million) and common equity, with Goldman Sachs Alternatives also committing further new equity.
• The Company's Board of Directors, acting on the unanimous recommendation of a Special Committee of independent directors, unanimously approved the proposed transaction.
• Neil Thomson has been appointed as the new Chief Financial Officer and principal financial officer, effective August 18, 2025, replacing Thomas Allen who will assist with the transition until August 29, 2025.
• The transaction is expected to close by the end of 2025, subject to regulatory approvals and other closing conditions, including stockholder approval.

Sentiment

Score: 8

Explanation: The transaction offers a substantial premium to public shareholders, indicating a favorable exit. The company's strong recent financial performance and the backing of significant strategic and financial investors for its private future suggest a positive outlook for the business itself, despite the delisting. The new CFO appointment also appears to be a strong, experienced hire.

Positives

• Unaffiliated stockholders will receive a significant cash premium of 83% over the unaffected share price, providing immediate and meaningful value.
• The take-private transaction provides stability and a long-term focus away from public market pressures, supported by world-class hospitality and investment partners.
• New strategic investors like MCR and Ashton Kutcher bring operational expertise and fresh capital to the company.
• Apollo Funds and Goldman Sachs Alternatives are providing substantial financing, indicating strong confidence in the company's future prospects.
• 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.
• Soho House has expanded its global footprint, opening new Houses in creative and culturally important cities such as São Paulo, Mexico City, Nashville, and Paris.
• The company has undertaken a significant transformation of its finance and operational systems, positioning the business for efficient scaling and long-term success.
• The new CFO, Neil Thomson, brings 30 years of extensive hospitality operations and finance experience.
• Post-merger executive compensation includes performance-based incentive plans (MIP) tied to EBITDA achievement, aligning management interests with long-term value creation.

Negatives

• Public shareholders will no longer participate in the future growth and potential upside of Soho House as it transitions to a private entity.
• The company's common stock will be delisted from the New York Stock Exchange and deregistered, reducing liquidity and transparency for investors.
• The transaction involves a substantial amount of new debt financing ($845 million), which could increase the company's leverage.
• The company is required to contribute up to $67 million in balance sheet cash to the transaction, potentially impacting its liquidity.
• The Merger Agreement includes customary 'no-shop' restrictions, limiting the company's ability to actively solicit alternative acquisition proposals, although a fiduciary out provision exists for superior proposals.

Risks

• The consummation of the merger is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) and any other applicable Antitrust Laws.
• The merger requires the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Company Common Stock and the affirmative vote of the holders of a majority of the votes cast by the Unaffiliated Company Stockholders.
• The Buyer Parties' obligations to consummate the merger are conditional on the prior or substantially concurrent funding of the Debt Financing and Equity Financing.
• The merger is subject to the absence of any law, injunction, judgment, or order issued by a governmental authority that prohibits, makes illegal, or enjoins its consummation.
• The Buyer Parties' obligations are also contingent on the accuracy of the Company's representations and warranties and the absence of a Company Material Adverse Effect after the agreement date.

Future Outlook

The company expects to build on its momentum of consistent, disciplined growth achieved since its IPO in 2021, with revenue increasing at an average annual double-digit rate and Adjusted EBITDA growing over 50% annually from 2022-2024. Returning to private ownership is anticipated to support continued sustainable international growth, safeguard the member experience, and expand the cultural and creative foundation of Soho House. The new management incentive plan (MIP) for executives is tied to EBITDA achievement for fiscal years 2026, 2028, and 2030, indicating a focus on long-term profitability and value creation.

Management Comments

• "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
• "Since our IPO in 2021, we’ve focused on building a stronger, more resilient business. Against a backdrop of challenging economic conditions and global uncertainty, from 2022-2024 we delivered consistent, disciplined growth with revenue increasing at an average annual rate of double digit growth, and Adjusted EBITDA growing at over 50% annually during the same period." Andrew Carnie, CEO
• "Returning to private ownership enables us to build on this momentum, with the support of world class hospitality and investment partners." Andrew Carnie, CEO
• "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." Tyler Morse, Chairman & CEO of MCR
• "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." Reed Rayman, Partner and Deputy Head of Hybrid at Apollo
• "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." Beat Cabiallavetta, Global Head of Hybrid Capital at Goldman Sachs Alternatives
• "We’re delighted to welcome Neil to Soho House & Co. He brings a rare combination of deep operational knowledge in hospitality, alongside financial expertise, which will be a huge asset as we continue to scale the business." Andrew Carnie, CEO (on Neil Thomson's appointment)
• "I am thrilled to be joining Soho House & Co at such an exciting time with the opportunity to further scale a unique global brand with its strong base of members and distinctive membership offerings. I’m looking forward to partnering with Andrew, the Board and the leadership team to take advantage of the multiple opportunities to grow the business, execute financial and operating process efficiencies and deliver profitability improvements." Neil Thomson, 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. It’s been an honor to serve as Soho House’s CFO and I wish the amazing team success in the future." Thomas Allen, former CFO

Industry Context

The take-private transaction for Soho House & Co Inc. reflects a broader trend where established hospitality and lifestyle brands, particularly those with strong membership models, attract significant private investment for long-term strategic growth away from public market scrutiny. The involvement of MCR, a major hotel owner-operator, and technology investor Ashton Kutcher, highlights the increasing convergence of traditional hospitality with operational efficiency and digital innovation. Apollo's hybrid capital solution demonstrates the flexibility of alternative asset managers in structuring deals for unique assets, while Goldman Sachs Alternatives' continued support underscores the perceived value and growth potential of the Soho House brand within the luxury lifestyle and hospitality sector.

Comparison to Industry Standards

• The 83% premium offered to unaffiliated shareholders is a substantial premium, often exceeding average premiums observed in broader M&A for public companies, indicating a strong valuation for their shares.
• MCR's portfolio, including iconic assets like the TWA Hotel and cloud-based hospitality software, suggests a strategic alignment with Soho House's distinctive brand and a potential for enhanced operational efficiency and member experience through technological integration, a strategy increasingly adopted by leading hospitality players.
• Soho House's reported 'double-digit revenue growth' and 'over 50% annually' Adjusted EBITDA growth from 2022-2024 demonstrate robust performance, positioning it favorably against many hospitality companies that faced post-pandemic recovery challenges and often reported more modest growth rates.
• The involvement of prominent technology investor Ashton Kutcher highlights a growing industry trend of integrating technology and digital platforms to enhance customer engagement and operational efficiency, a strategy adopted by other luxury brands and a key differentiator in the modern hospitality landscape.

Management Changes

Corporate Governance

Legal Proceedings

• The Merger Agreement includes provisions for 'Transaction Litigation,' defined as any Legal Proceeding commenced or threatened by any Person against a Party or its Subsidiaries or Representatives relating to the Merger or other contemplated transactions. Parties have agreed to provide prompt notice and cooperate in defense, settlement, or prosecution of such litigation.

Related Party Transactions

• The merger itself is a significant related party transaction, as existing significant shareholders including Executive Chairman Ron Burkle, Yucaipa Companies LLC, Richard Caring, Nick Jones, and Goldman Sachs Alternatives are rolling their equity interests and retaining majority control.
• Post-merger employment terms and significant performance-based incentive awards (MIP) have been established for key executives: Andrew Carnie (CEO), Neil Thomson (CFO), and Tom Collins (COO).
• The agreement includes provisions for the repurchase of Rollover Shares held by executives upon certain terminations of employment.
• The filing states that, except for indemnification, compensation, or other ordinary course employment arrangements, there are no other undisclosed material related party contracts required by Item 404 of Regulation S-K.

Stakeholder Impact

• **Unaffiliated Shareholders**: Will receive $9.00 per share in cash, representing an 83% premium, providing immediate liquidity and a significant return on their investment. They will no longer hold equity in the company.
• **Rollover Shareholders**: Existing significant shareholders will roll their equity, retaining a substantial stake and majority control, indicating a long-term commitment to the company's future under private ownership.
• **Employees**: The CFO transition is announced, and key executives (CEO, CFO, COO) will have new employment terms and significant performance-based incentive awards (MIP), aligning their interests with the new private ownership's long-term goals. The company's stated focus on 'sustainable international growth' could imply continued opportunities for other employees.
• **Customers/Members**: The stated goal of the new ownership is to 'safeguard the member experience' and 'drive sustainable international growth for House members,' suggesting a continued focus on enhancing the core membership value proposition.
• **Creditors**: Existing Senior Secured Notes will be refinanced with proceeds from the new debt financing, impacting existing creditors. New lenders (Apollo, Goldman Sachs) will become significant creditors to the private entity.
• **Management**: Key executives will benefit from new employment agreements and substantial performance-based equity awards, incentivizing them to drive profitability and growth under the new ownership structure.

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 on Schedule 13E-3 with the SEC.
• The Company will establish a record date for and hold a stockholder meeting to obtain the Requisite Stockholder Approval (majority of outstanding shares and majority of unaffiliated shares).
• The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) must expire or be terminated.
• The Debt Financing must be funded prior to or substantially concurrently with the Closing.
• The Class A Common Stock will be delisted from the NYSE as soon as reasonably practicable after the Effective Time.
• The Class A Common Stock will be deregistered pursuant to the Securities Exchange Act of 1934 as soon as reasonably practicable after delisting.
• A management incentive plan (MIP) will be established post-merger for eligible employees, with options vesting based on EBITDA achievement for fiscal years 2026, 2028, and 2030.
• The Company Board will approve the nomination and appointment of specific individuals to the Company Board, effective as of the Closing.

Key Dates

Recommendation

For unaffiliated public shareholders, the definitive agreement to be taken private at $9.00 per share, representing an 83% premium, is a highly favorable outcome. The stock price has likely already adjusted to reflect this offer. Therefore, for current holders, the recommendation is to hold shares until the transaction closes to realize the cash consideration. There is no indication of a higher offer being likely given the 'no-shop' clause (with a fiduciary out) and the significant rollover commitments from existing major shareholders. For new investors, the company is transitioning to private ownership, eliminating the opportunity for public market investment.

Keywords

Soho House, SHCO, Take-private, Merger, Hospitality, Membership platform, Private equity, MCR, Yucaipa, Apollo Funds, Goldman Sachs Alternatives, CFO transition, Neil Thomson, Andrew Carnie, Ashton Kutcher, Luxury lifestyle, Corporate governance