The renowned private members’ club chain Soho House (SHCO) has agreed to go private in a deal valued at $1.8 billion, excluding debt. A group of investors led by New York-based MCR Hotels has offered to pay $9 per share for the company, according to a Wall Street Journal report. Notably, Apollo Global (APO) is expected to provide more than $700 million in equity and debt financing. The final terms of the deal could be announced today, unless talks encounter any unexpected snags.
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The $9 per share offer represents a nearly 18% premium to SHCO’s closing price of $7.64 on Friday, August 15. Soho House’s controlling shareholder, Ron Burkle, will roll over his stake along with certain other shareholders. Year-to-date, SHCO stock has underperformed the broader S&P 500 (SPX) index, gaining merely 2.6%.
Here’s Why Soho House Is Going Private
In January, activist investor Dan Loeb’s hedge fund, Third Point, disclosed a roughly 10% stake in Soho House. The fund has been pushing the company to consider outside bids to get a higher price for its shares and boost shareholder returns. In December 2024, Soho House received a similar $9 per share offer, when SHCO stock was trading much lower, at around $5 per share. However, the company rejected what Loeb called a “sweetheart deal.”
Due to the nature of its membership-only club business, Soho House’s growth has been volatile, with periods of high membership and others of very sluggish growth. However, in the past three quarters, Soho House has reported consistent net profits. Interestingly, in the second quarter of fiscal 2025, Soho House recorded a 15.9% year-over-year jump in membership revenue to $118.6 million, adding to the club’s attractiveness. In the past three months, SHCO stock has surged 15.4%.
Soho House has a long history of twists and turns. It was founded in 1995 in London and opened its first club in the U.S. in 2003. In 2012, Burkle, a member of the club, took over a controlling stake in Soho House. In 2021, Soho House went public at $14 per share, but its shares have experienced a rollercoaster ride as the company has recorded large losses over the years.
Is SHCO Stock a Buy, Hold, or Sell?
On TipRanks, SHCO stock has a Hold consensus rating based on one Hold rating received in the past three months. The average Soho House price target of $7.50 implies 1.8% downside potential from current levels.
