Hospitality company SBE Entertainment Group has agreed to acquire Morgans Hotel Group Co., according to people familiar with the matter, ending a long saga in which the two companies have held on-and-off-again merger talks.
SBE is paying $2.25 a share in cash for the outstanding shares of Morgans
which were recently trading on the Nasdaq market at around $2, though the shares were trading as low as $1.33 last week before jumping on speculation of a takeover.
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The deal puts an equity value on the company of about $82 million, these people said. The total enterprise value of the combined company, including assumption of debt, would be about $800 million, say people familiar with these companies’ thinking.
Private-equity investor Ronald Burkle’s Yucaipa Cos., which holds $75 million of preferred equity shares in Morgans and warrants for common shares, will receive 25% of common equity in SBE, according to people close to the deal.
SBE Chief Executive Sam Nazarian, who founded the company in 2002, will become CEO of the combined company and retain majority control. The Los Angeles–based company is acquiring all the Morgans brands and ownership of the Hudson and the Delano properties.
Morgans owns or operates 13 boutique hotels, including New York’s Hudson, the Mondrian in Los Angeles and the Delano in Miami Beach. The combined company will own or operate 20 hotels, including properties under the flagship SLS brand.
An expanded version of this report appears at WSJ.com.
View more information: https://www.marketwatch.com/story/high-end-morgans-hotel-chain-dealt-to-sbe-for-82-million-2016-05-09