MCR Hotels' plans to acquire all remaining shares in hotel and membership club brand Soho House have hit a bump in the road, according to a Securities & Exchange Commission filing.
Announced Aug. 15, the $200 million deal would take Soho House private by EH Parent LLC, an affiliate of The Yucaipa Companies, and EH MergerSub Inc., a subsidiary of EH Parent. All three are Delaware-based limited liability companies.
On Jan. 5, the SEC stated MCR informed Yucaipa “that it will not be able to fund its closing commitment in full at or prior to the currently anticipated closing date.”
That closing date is today, Jan. 9, when Soho House stockholders were due to attend a special meeting to fully rubberstamp the transaction. As of publication time, that meeting is still scheduled to occur.
The August agreement stated that MCR would pay Soho House shareholders “$9 per share in cash, an 83% premium to the unaffected share price.”
Soho House has 46 hotels, as well as three The Ned hotels in Doha, London and New York City, and a handful of other assets.
Company officials are scrambling to save the deal, with Soho House stating that its share price on the New York Stock Exchange was trading approximately 9.6% down during early Friday trading. The Wall Street Journal reports Soho House shareholder Goldman Sachs Asset Management is contributing some of its shares to "help cover the funding shortage."
Soho House's share price at press time of $7.99 is still higher than it was on Aug. 15, when MCR said its then “acquisition price per share would have been a 17.8% premium on Soho House’s share price of $7.64 … with the transaction valuing the London-based firm at $2.7 billion, including debt,” according to CoStar.
Investing.com said that a special committee of management from both Yucaipa and Soho House are “working with MCR affiliates and other parties to secure the necessary $200 million in funding. The outcome of these efforts remains uncertain, though the parties have expressed their intention to close the transaction as soon as all conditions are met."