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Soho House shares surged nearly 70 per cent after the members’ club announced it had received an offer to buy it at a premium to its current market value, following years of stock price struggles.
The offer, at $9 a share, represents an 83 per cent premium to Wednesday’s closing price of $4.91. It is supported by Soho House’s controlling shareholder, American retail billionaire Ron Burkle and his Yucaipa investment vehicle, the group said on Thursday.
Still, the offer is well below Soho House’s initial listing price of $14 a share when it went public in 2021. Thursday’s gains brought the stock to $7.82 in mid-morning trading in New York.
The offer is contingent on significant shareholders — including Burkle and Yucaipa — maintaining their equity interests through a rollover arrangement, the group added.
Soho House did not disclose the identity of the bidder, but said it was a “new third-party consortium”. The company revealed in May it had received a take-private offer and rejected it, saying it did not reflect the value of the company.
The latest offer was “the result of a thorough strategic review undertaken by Yucaipa and its financial advisers to enhance shareholder value, as Yucaipa believes the inherent value of [Soho House] is not reflected in its current share price,” the company said in a statement.
The board had formed an independent special committee to evaluate the offer, it said, adding that no assurances could be given that its assessment would result in any change in strategy.
The potential deal follows a longtime slump of shares since the company, which operates 45 members’ clubs worldwide with more than 267,000 members, went public. Wednesday’s closing price was down 64 per cent from its listing price.
Soho House was in turmoil earlier this year after New York-based short seller GlassHouse published a report in February criticising the company’s “broken business model and terrible accounting”, relying on expanding into less affluent cities and failing to turn a profit in its 28-year history.
The members’ club countered the following month, saying an independent review of its accounting practices had “shown no material issues”.
Soho House reported on Thursday that it posted $333.4mn in revenue in the three months to September 29, up 14 per cent from the previous year. It posted a net profit of $0.2mn, compared with a $49.3mn loss a year ago.
“Despite a choppy consumer environment, our long-term strategic focus on operational excellence and delivering the best member experience continues to drive improved performance,” said Andrew Carnie, chief executive. He added that the company was seeing “significant demand” for recent openings, such as in São Paulo, Mexico City and Portland, Oregon.
