Shares in Soho House tumbled on Thursday after a major backer in a proposed $1.8 billion deal to take the members’ club operator private failed to deliver a critical funding commitment. The London-founded group said Yucaipa, the investment vehicle of billionaire executive chairman Ron Burkle, had been notified that MCR Hotels could not provide its planned $200 million equity contribution by the expected closing date.
MCR Hotels had been a cornerstone investor in the deal, announced last summer, leading a consortium that agreed to acquire the company’s outstanding shares at $9 each. The withdrawal of MCR, which owns high-profile properties including New York’s High Line Hotel and London’s BT Tower, now casts significant doubt over the transaction.
Soho House shares closed down 9.6 percent at $8.11, extending a long period of underperformance since its 2021 New York Stock Exchange debut at $14 per share. The stock has lost roughly 40 percent of its value since listing, reflecting investor concerns over the company’s growth prospects and earnings consistency.
In a regulatory filing, Soho House said Yucaipa and the board’s independent special committee were “engaging with affiliates of MCR, as well as other parties” to secure replacement funding. The company cautioned that “there can be no assurance that such efforts will be successful.” Despite the uncertainty, Soho House confirmed that a shareholder vote on the proposed merger is still scheduled to take place.
If completed, the take-private deal would see founder Nick Jones roll over his 6 percent stake alongside existing shareholders, including restaurateur Richard Caring and Goldman Sachs Alternatives, which has committed additional capital. Other investors involved include actor-turned-tech investor Ashton Kutcher and private equity firm Apollo Global Management, providing a mix of equity and debt financing.
The withdrawal of MCR also raises questions about planned leadership changes. Under the original deal, MCR CEO Tyler Morse was expected to join Soho House’s board as vice-chairman, a move now in doubt.
The setback highlights the challenges facing Soho House as it seeks to restructure its ownership and chart a path for growth. After years of expansion into cities worldwide, the company has struggled to convince public market investors of its long-term profitability, and the failed funding commitment adds another layer of uncertainty to its strategy.
Investors and analysts will now watch closely to see whether alternative funding sources can be secured and whether the proposed deal can proceed as planned, or if Soho House will remain publicly traded amid a volatile market environment.
