Ron Burkle, the billionaire chairman of Soho House, and a consortium of investors are pursuing a near $1.8 billion (£1.4 billion) deal to take the private members’ club private, arguing its true value isn’t reflected in its current stock price. The proposed buyout offers $9 per share, a substantial 83% premium over Wednesday’s closing price. This move follows a previous attempt to delist earlier this year.
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Soho House shares surged over 60% in early New York trading, reaching $7.85 and boosting the company’s market capitalization to over $1.5 billion. The potential acquisition comes after Soho House explored delisting options and rejected a bid from an undisclosed party in May.
From London Townhouse to Global Empire: A History of Soho House
Founded in 1995 in a London townhouse, Soho House has grown to encompass 45 exclusive clubs worldwide. The company went public in 2021 with a valuation of $2.8 billion under Burkle’s leadership. Despite its prestigious membership, boasting celebrities like Kate Moss and even royalty, Soho House has struggled with profitability for nearly three decades.
The company’s stock price has plummeted more than two-thirds since its IPO. In February, a short-selling report likened Soho House to the failed WeWork, criticizing its business model and accounting practices. Soho House refuted the report, citing factual inaccuracies and misleading statements.
Undervalued Potential: The Rationale Behind the Buyout
Burkle and his fund, Yucaipa Companies, assert that the market undervalues Soho House. The proposed deal would involve Burkle transferring his existing shares into the privatized entity. The 72-year-old billionaire, with a net worth of $2 billion, built his fortune by revitalizing grocery stores and expanding into hospitality, food, and logistics.
Burkle acquired a controlling stake in Soho House from Richard Caring in 2012. Founder Nick Jones stepped down as CEO in 2022 for health reasons. Beyond his business ventures, Burkle has been a significant Democratic Party donor and maintained a close relationship with former President Bill Clinton.
Positive Growth Amidst Buyout Talks
Despite market challenges, Soho House reported a 4.8% increase in membership, reaching 267,494, with a waiting list exceeding 111,000. Revenue grew by 13.6% to $333.4 million, and the company achieved a net income of $200,000. The proposed buyout suggests a belief in the long-term potential of Soho House despite its recent financial performance. The deal offers a significant premium to existing shareholders and reflects the confidence of Burkle and his partners in the future of the exclusive members’ club. This development marks a pivotal moment for Soho House and its future trajectory.
