SBE Entertainment to Buy Morgans Hotel Group for $82 Million
Skift Take
Can these two companies--one with a somewhat questionable track record and the other, whose star has lost its luster--work together to relive their glory days? We'll see.
After a lengthy battle that already included one failed attempt, Sam Nazarian's privately owned SBE Entertainment Group, which includes the SLS Hotels brand, has finally won its bid to acquire New York-based Morgans Hotel Group Co. for $82 million, paying $2.25 per share in cash for the outstanding shares of Morgans Hotel Group.
Nazarian will serve as CEO of the combined company and handle day-to-day management responsibilities. The deal includes the purchase of all of Morgans' brands, as well as buying Morgans' three owned properties (The Delano South Beach, Hudson Hotel in New York, and the Clift Hotel in San Francisco).
Together, the combined company will have 20 hotels and the Morgans transaction is worth an estimated $794 million. The acquisition is expected to close in the third or fourth quarter of this year, following regulatory and shareholder approvals. Under this agreement, Morgans shareholders representing 29 percent of the company's outstanding shares of common stock have signed voting agreements in support of the transaction.
Last week, reports surfaced that Los Angeles-based SBE Entertainment was close to signing a deal to buy the boutique hotel chain famously started by hotelier Ian Schrager in 1984 and credited with launching the first-ever boutique hotel.
Last year, both companies were reportedly close to signing a deal but the merger fell through in November when two Morgans Hotel Group board members clashed on the deal.
Ronald Burkle, a preferred-equity holder in Morgans and founder of The Yucaipa Companies and a friend of Nazarian, approved of the acquisition by SBE. However, Jason Kalisman, a board member whose investment firm, OTK Associates, which is Morgans' largest shareholder, did not. Kalisman served as former chairma
