White City Club Soho House
Soho House has abandoned plans to go private after saying it had rejected an offer because it undervalued the private club chain.
The New York-listed company said Friday it rejected an offer from an unnamed party despite it being at a “substantial premium” to its current market capitalization. .
Soho House shares have fallen more than 56% since listing on the New York Stock Exchange in 2021, leaving it valued at just over $1 billion (£790 million) from floating price of 2.5 billion dollars.
In February, the company said an internal special committee was assessing options, including a deal to go private, following a scathing comment from an analyst who said Soho House faced an “existential crisis”.
In a note to investors on Friday Soho House said: “The select committee concluded that the offer does not adequately reflect the value of the company and is not in the interests of its public shareholders.”
The offer did not involve the bidder acquiring the entire company and was based on the fact that some shareholders renewed their shares.
In a letter to shareholders in March, Mr Burkle fuelled speculation that Soho House could go private, hitting the public markets by accusing them of not giving enough weight to growth.
He wrote: “When we went public, I believed the market would reward growth, but it seems to have quickly shifted to rewarding free cash flow and earnings outpacing revenue growth.”
Mr Burkle, along with founder Nick Jones and restaurateur Richard Caring, own about 75 per cent of the company. In the letter, Mr. Burkle denied previous reports that he was involved in a plan to take the company private with a group of shareholders.
He said: “To be clear, I want and intend to be the owner for the long term, but I am not part of the group at this time and have not placed any bets.”
CC Capital, a New York investor led by a former Blackstone executive, was also reported to have held talks with the company. CC Capital then declined to comment.
It comes amid growing concerns about the financial health of Soho House, which has never turned a profit in its 28-year history. The company posted a loss of $118 million in 2023, despite revenue growth of 17 percent.
It also had accumulated debt of $638 million at the end of 2023, an increase from $532 in 2022.
In a report published in February, investment research firm GlassHouse accused Soho House of being “a company with a broken business model and terrible accounting” and warned it would face the same bankruptcy fate as WeWork.
Soho House became a hit. back, claiming the report contained “factual inaccuracies, analytical errors and false and misleading statements.”
In an interview with The Telegraph in March, Soho House chief executive Andrew Carney said: “Essentially they don't I don't understand our business.”
Soho House operates more than 40 clubs around the world. It has its roots in London's Greek Street, where founder Nick Jones opened the company's first home in 1995 as a meeting place for creative professionals.
As the business grew, it attracted celebrity patronage. including Leonardo DiCaprio and Margot Robbie, as well as the Duke and Duchess of Sussex, who met on a date in Dean Street in 2016.
Despite the losses, Soho House said this month that the number had increased. members to 261,571 from 259,884 in the first quarter of 2024 compared to the previous three months.
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