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sbe Buying Morgans Hotel Group

(May 2016) posted on Tue May 10, 2016

Boutique hotelier sold for $800M

sbe Entertainment Group said it will acquire Morgans Hotel Group in an all-cash stock buy valued at about $800 million. SBE said acquiring the New York-based boutique hotel pioneer will enhance its efforts to build a fully integrated lifestyle hospitality platform.

"We have long admired Morgans, its impressive history and culture of service and innovation, so we're delighted to reach an agreement on this transaction," said Sam Nazarian, founder, chairman and ceo of Los Angeles-based sbe. "Our strategic vision is to operate these amazing and unique lifestyle properties in key international gateway markets, and Morgans' hotels, along with their talented team, fit perfectly within that vision."

sbe will take Morgans--which has struggled financially in recent years--private under the deal, which represents a change from initial discussions the two companies held last year, in which Nazarian planned to use a merger to create a publicly traded company. That deal fell apart after private-equity investor Ronald Burkle, a preferred equity holder in Morgans, and Jason Kalisman, a Morgans board member whose investment firm is the biggest shareholder, clashed over terms of the deal, The Wall Street Journal reports. Under the new deal, Burkle’s Yucaipa Cos. will receive 25 percent of SBE’s common shares.

The acquisition, which is subject to regulatory approvals, is expected to close later this year.

With the acquisition, sbe will add Morgans' brands and 13 domestic and international hotel management agreements to its own portfolio, which includes such imprints as SLS, Hyde, and The Redbury hotels, as well as such venues as Katsuya, Cleo, The Bazaar by José Andrés, Hyde Lounge and Umami Burger. The deal includes SBE taking direct ownership of Morgans' 194-room Delano Hotel in South Beach, the 878-room Hudson Hotel in New York and the 372-room Clift Hotel in San Francisco.

In addition, sbe expects to add an additional five hotels by the end of 2016 with the planned opening of SLS Brickell in Miami, Townhouse Hotel in Miami Beach, SLS Park Avenue in New York City, Hyde Hallandale in Florida and the Mondrian Doha, giving it a total of 25 hotels.


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