Soho House, the internationally renowned members’ club chain, has agreed to a $2.7 billion (£2 billion) deal to go private after facing a challenging four years on the New York Stock Exchange. The New York-based hotel group MCR Hotels will lead a group of new equity investors in this takeover, resulting in Soho House’s delisting from the stock market.
As part of this transition, actor and technology investor Ashton Kutcher, who has been a longtime member, will join the Soho House board. Additionally, Tyler Morse, CEO of MCR Hotels, will assume the position of vice-chairman.
Stock market performance and shareholder stakes
Soho House debuted on the NYSE in 2021 with a valuation of about $2.8 billion but has since struggled, with its share price falling from above $14 in August 2021 to around $7.64 recently. The company has posted cumulative losses of $739 million over the four years on the public exchange, despite reporting profits in the last three quarters.
The deal values Soho House at approximately $2.7 billion, including $700 million in debt. The offer price of $9 per share represents an 83% premium over prices before investor interest in December 2024. About 15 per cent of the publicly traded shares will be bought out at this price.
Key shareholders such as founder Nick Jones (retaining 5 per cent), billionaire investor Ron Burkle (holding 40 per cent), and restaurateur Richard Caring (with 21 per cent) will maintain their stakes post-deal. Investment bank Goldman Sachs also retains its 8 per cent share.
MCR hotels: Experience and ambition
MCR Hotels is the third-largest hotel operator in the United States, managing over 150 properties including prominent New York City locations like the High Line Hotel and the TWA Hotel at JFK Airport. The company recently undertook an ambitious project to transform London’s BT Tower into a hotel for £275 million.
This extensive experience in hospitality will be leveraged to support Soho House’s upcoming phase of growth, balancing expansion with the need to preserve the brand’s exclusivity that has defined it for decades.
Soho house’s global footprint and challenges of expansion
Since its founding in 1995 on London’s Greek Street by Nick Jones, Soho House has expanded aggressively worldwide. The group now operates 10 clubs in London and 48 across the globe, including major cities such as Paris, Istanbul, Bangkok, Mumbai, Los Angeles, and New York, where it has three clubs.
Soho House is a magnet for celebrities, creative professionals, and socialites. Stars like Kate Moss, Kendall Jenner, Ellie Goulding have been frequent visitors. The famous blind date of the Duke and Duchess of Sussex, Harry and Meghan, in 2016 at its London club also highlights its cultural cachet.
Despite rapid growth, the company has struggled to maintain the exclusive atmosphere its 213,000 members pay up to £2,920 annually to enjoy. The balance between expansion and exclusivity remains a pressing challenge.
Investor scrutiny and market pressures
The company’s struggles have attracted attention from activist investors and short sellers. Hedge fund Third Point, led by billionaire Dan Loeb, pushed Soho House to pursue other investors and explore a competitive bidding process, criticizing the private equity-backed buyout as a “sweetheart deal” potentially influenced by conflicts of interest.
Short seller firm GlassHouse raised concerns over Soho House’s accounting practices, comparing its trajectory to the ill-fated WeWork. Soho House denied these allegations, citing factual inaccuracies.
Optimism and future prospects
Soho House CEO Andrew Carnie expressed confidence that the deal reflects strong faith from existing and incoming shareholders despite a global economic backdrop fraught with uncertainty.
Carnie said, “Returning to private ownership enables us to build on this momentum, with the support of world-class hospitality and investment partners.” He praised the company’s growth, stating that revenue has doubled over the past three years, and praised the “remarkable” contributions of the company’s teams.
Looking ahead, Soho House aims to focus on profitability, member experience, and carefully curated expansion while remaining true to the unique spirit that has made it a beloved brand worldwide.
The privatization deal, combined with the arrival of Ashton Kutcher on the board and MCR Hotels’ operational expertise, signals a new chapter for Soho House—one designed to navigate competitive pressures and continue evolving as a premier destination for the creative elite and discerning members globally.
