DEFM14A: Soho House to Go Private in $9.00/Share Cash Merger

Soho House & Co Inc. stockholders are invited to vote on a proposal to adopt a merger agreement to take the company private at $9.00 per share in cash.

Summary

• Soho House & Co Inc. (Soho House) will hold a special meeting on January 9, 2026, to vote on a proposal to adopt an Agreement and Plan of Merger.
• The merger will result in Soho House becoming a privately held company, with its Class A common stock delisted from the New York Stock Exchange.
• Each outstanding share of common stock (excluding rollover shares and certain other exceptions) will be converted into the right to receive $9.00 in cash, without interest.
• This $9.00 per share price represents a premium of approximately 83% over the Class A common stock's closing price of $4.91 on December 18, 2024, the last trading day before the initial offer announcement.
• The closing stock price as of December 10, 2025, was $8.84.
• A special committee of independent directors unanimously determined the merger to be advisable, fair, and in the best interests of Soho House and its unaffiliated stockholders.
• The Board of Directors, acting on the Special Committee's recommendation, also unanimously approved the merger.
• The merger requires approval from a majority of the voting power of outstanding common stock and a majority of votes cast by unaffiliated stockholders.
• Certain equity investors, including Apollo Capital Management, L.P., MCR Investors LLC, and a group led by Ashton Kutcher and Daniel Rosensweig, have committed to fund a portion of the merger consideration.
• Key stockholders, including Yucaipa and its founder Mr. Ron Burkle, Mr. Nick Jones, Mr. Richard Caring, Mr. Mark Ein, Mr. Andrew Carnie, Mr. Tom Collins, and certain affiliates of Goldman Sachs & Co. LLC, have agreed to roll over a significant portion of their shares, representing approximately 97.8% of the voting power as of the record date.
• The total cash needed to complete the merger and related transactions is anticipated to be approximately $1.2 billion, funded by debt financing, equity financing, and potentially up to $67.0 million from subscription agreements or Soho House's cash on hand.

Sentiment

Score: 8

Explanation: The sentiment is highly positive for unaffiliated shareholders due to the substantial 83% premium offered in an all-cash transaction, providing immediate and certain value. The unanimous recommendation by the Special Committee and Board, following extensive negotiations, further supports the favorable terms. While the company's historical losses and identified material weaknesses present risks, the going-private transaction mitigates these for exiting public shareholders. The delay in SEC review is a minor negative, but the overall deal terms are very attractive for those cashing out.

Positives

• Unaffiliated stockholders will receive $9.00 per share in cash, representing an 83% premium over the Class A common stock's closing price on December 18, 2024.
• The all-cash consideration provides certainty of value and immediate liquidity to unaffiliated stockholders, mitigating ongoing business and financial execution risks as a public company.
• The Per Share Price remained unchanged despite Soho House's fiscal year 2024 Adjusted EBITDA being 18.5% lower than initial projections and fiscal year 2025 budgeted Adjusted EBITDA being 9.6% lower than initial projections.
• The Special Committee and Board unanimously recommended the merger, indicating a thorough evaluation process with independent advisors.
• The merger has a reasonable likelihood of closing due to anticipated regulatory approvals and the financial resources of the equity investors.

Negatives

• Unaffiliated stockholders will not participate in any future earnings, dividends, appreciation in value, or growth of Soho House's business as a private entity.
• The receipt of cash for shares will generally be a taxable event for U.S. Holders.
• The merger agreement imposes restrictions on Soho House's ability to solicit alternative acquisition proposals, and a termination fee of $20.0 million is payable by Soho House under certain circumstances.
• The maximum aggregate liability of the Buyer Filing Parties for breaches under the Merger Agreement or Equity Commitment Letters is capped at $10.0 million.
• The company has historically incurred net losses since its inception and has substantial debt, which could be a detriment if the company were to remain public.

Risks

• Uncertainties related to the consummation of the Merger, including obtaining the Requisite Stockholder Approval and regulatory approvals.
• Potential for unanticipated difficulties or expenditures relating to the Merger.
• Obligation to pay a $20.0 million termination fee and reimburse certain expenses if the Merger Agreement is terminated under specific circumstances.
• Disruption and uncertainties caused by the announcement and pendency of the Merger, potentially affecting business relationships, operating results, and stock price.
• Provisions in the Merger Agreement limit the company's ability to pursue alternatives, potentially discouraging other third-party offers.
• Risk of lawsuits against the company and its directors related to the Merger, which could cause delays, divert management attention, and adversely affect the business.
• Failure to obtain the Equity Financing or Debt Financing, or insufficient cash on hand, could prevent the completion of the Merger.
• The trading price of Class A common stock may fluctuate during the pendency of the Merger and could decline significantly if the Merger is not completed.
• Soho House has incurred net losses in each year since its inception and may not achieve profitability.
• Planned growth could strain senior management, employees, information systems, and internal controls.
• Success depends on the strength of its name, image, and brands; diminution of value could adversely affect the business.
• Intellectual property rights are valuable, and failure to protect them (e.g., due to brand squatting) could negatively impact brand names.
• Substantial debt and potential for additional indebtedness may negatively affect financial results and limit growth strategy.
• Material weaknesses in internal controls over financial reporting have been identified, and remediation efforts may not be timely or successful.
• Future performance depends on the ability to respond to changes in consumer tastes and preferences.
• Yucaipa, through its participation in the Voting Group, has significant influence over the company, potentially limiting other stockholders' influence.
• Geographic concentration of properties in certain cities exposes the company to disproportionate harm from economic downturns or disasters.
• Reliance on information systems and technology makes the company vulnerable to failures, interruptions, or cybersecurity attacks.
• Exposure to foreign currency fluctuations and geopolitical instability due to global operations.

Future Outlook

Following the completion of the merger, Soho House will become a privately held company, allowing it to operate outside the public market's focus on short-term financial results. The Buyer Filing Parties believe this will enable Soho House to refocus its operating philosophy, continue growing and enhancing membership and operational excellence, increase member satisfaction, and support growth in its number of Houses and other properties, ultimately creating additional enterprise value consistent with their investment objectives.

Management Comments

• Mr. Ron Burkle stated in March 2022 that the share buyback program reflected 'our belief in the favorable long-term opportunity ahead, given [Soho House's] scale and pace of international growth.'
• Mr. Ron Burkle indicated in March 2024 that 'The public market doesn't seem to understand or fully appreciate the value of Soho House, and the interest from the special committee process has shown private buyers may be willing to step-up and close the gap' and that he was 'not intending to be a seller.'

Industry Context

The decision to take Soho House private is driven by the belief that public markets often focus on short-term, quarterly financial results, which can hinder a company's ability to execute long-term strategic initiatives. This move aligns with a trend where companies with unique business models, like membership platforms, seek private ownership to pursue growth and operational improvements away from public market pressures.

Comparison to Industry Standards

• Morgan Stanley's comparable companies analysis used a 2025E AV/EBITDA multiple range of 10.25x 11.25x, resulting in an implied value per share of $6.19 $7.23 based on financial projections and $4.27 $5.12 based on Street Consensus.
• The Per Share Price of $9.00 implies a multiple of 20.2x Soho House's fiscal year 2024 Adjusted EBITDA and 12.9x its revised fiscal year 2025 budgeted Adjusted EBITDA, which the Special Committee viewed as attractive.
• Morgan Stanley's precedent transactions analysis, comparing premia paid in 16 selected transactions in relevant industries since 2004, showed an average premium of 26% (54% unaffected) and a median of 22% (40% unaffected). The 83% premium offered to Soho House stockholders is significantly higher than these averages.
• An analysis of 10 controlling shareholder take-private transactions showed an average premium of 12% (33% unaffected) and a median of 8% (35% unaffected), further highlighting the substantial premium in the Soho House deal.
• A levered cash buyer analysis by Morgan Stanley, assuming a 20-25% internal rate of return and an exit Adjusted EBITDA multiple range of 9.75x-10.75x, estimated an implied value per share of $7.37 to $9.65, with the $9.00 offer falling within this range.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of this proxy statement, there are no pending lawsuits challenging the Merger.
• Soho House has received books and records requests and disclosure deficiency letters from certain purported stockholders, claiming allegedly material omissions in the preliminary proxy statement.
• Soho House has made supplemental disclosures in the definitive proxy statement to avoid litigation risks and uncertainties.

Related Party Transactions

• Soho House is party to various lease, hotel management, and design services agreements with affiliates of The Yucaipa Companies, LLC (Yucaipa), which has significant influence over Soho House.
• Lease agreements with Yucaipa affiliates include properties in Los Angeles, New York, Palm Springs, Lake Arrowhead, and formerly Stockholm.
• Hotel management agreements with Yucaipa affiliates include The Ned London, The Ned New York, The Ned Doha (until April 2024), and The LINE and Saguaro hotels.
• Design service agreements with Yucaipa affiliates include Oryx Corniche Developments QPSC (until April 2024) and GH123GREENWICH LLC.
• Mr. Ron Burkle (Yucaipa founder and Executive Chairman) agreed to purchase 4.4 million shares of Class B Common Stock from Mr. Nick Jones (Soho House founder) for $6.00 per share, with an additional $1.50 per share payable if the merger closes within 12 months.
• Soho House entered into a fee agreement with Yucaipa Alliance Management, LLC (an affiliate of Yucaipa) for a $10.0 million advisory fee for services related to the merger.
• Mr. Richard Caring (Board member) and Goldman Sachs (Reinvestment Stockholder) have rollover side letters that may allow them to cash out a portion of their rollover shares if additional equity funding is raised.
• The MCR Investors will provide consulting services to Soho House post-merger for a monthly fee of $83,333.33, as long as they retain the right to appoint at least two directors.

Stakeholder Impact

• Shareholders (unaffiliated): Will receive $9.00 per share in cash, providing immediate liquidity and a significant premium over the unaffected stock price, but will lose future participation in the company's growth.
• Shareholders (reinvestment/equity investors): Will maintain an ownership stake in the private company, allowing them to benefit from future growth and strategic initiatives without public market pressures.
• Employees: Management and employees are expected to be able to execute more effectively on future strategic plans as a private company, free from public reporting burdens. Executive officers will receive new management incentive plans and certain repurchase rights for their rollover shares.
• Customers/Members: The company aims to continue growing and enhancing membership and operational excellence, increasing member satisfaction, and supporting growth in its properties.
• Creditors: Existing debt will be refinanced, and new debt facilities will be put in place, potentially altering the company's capital structure and debt service obligations.

Next Steps

• Soho House stockholders will vote on the Merger Proposal and the Adjournment Proposal at a Special Meeting on January 9, 2026.
• The merger is expected to be completed in January 2026, subject to stockholder approval and other closing conditions.
• Following completion of the Merger, the Class A Common Stock will be delisted from the NYSE and deregistered under the Exchange Act.

Key Dates

Recommendation

The recommendation for unaffiliated stockholders is to accept the offer by voting FOR the Merger Proposal. The $9.00 per share cash consideration represents a substantial 83% premium over the unaffected stock price, offering immediate and certain value. This is particularly attractive given the company's history of net losses, identified material weaknesses in internal controls, and the inherent risks of remaining a public company in a volatile market. The thorough evaluation and unanimous recommendation by an independent Special Committee and the Board further support the fairness of the terms for unaffiliated shareholders.

Keywords

Soho House, Merger, Going Private, SEC Filing, Proxy Statement, Stockholder Vote, Equity Financing, Debt Financing, Premium, Delisting, Corporate Governance, Risk Factors, Hospitality, Membership Platform, Yucaipa, Apollo, MCR Investors, Ashton Kutcher, Daniel Rosensweig