SBE, the world renowned hospitality company, has struck a deal with Morgans Hotel Group that will facilitate a friendly takeover this year. Part of the terms of the deal will see all outstanding shares of Morgans stock acquired by SBE for just over $2 per share.
Beijing, China, June 29, 2016 — Along with the exchange of Morgans Series A securities, the assumption of obligations and transfer of leases, represents a total agreement value of close to $800 million.
Michael Lane, Global Co-Head of the Investment Management Division at Shizuoka Capital Wealth Management commented on the share acquisition at his blog “SBE seemed to have concentrated their end of the deal on favourable per share prices which represent a 69 percent premium over Morgans’ initial closing price in the first week of May. With the deal including ownership of the Hudson hotel in New York and the Delano property in Miami Beach this is definitely going to raise the global profile of SBE to new levels”
Morgans is a low scale but highly influential leisure operator that, under its founders, nightclub legends Ian Schrager and Steve Rubell, helped explode the boutique hotel scene in the 80s. It featured elegantly designed properties with lobbies that became public gathering areas.
More recently, Morgans has suffered from poor financial returns, board room squabbling and loss of market share as the big hotel chains began to compete in the niche boutique, or “lifestyle”, sector.
“The failure of negotiations last year was a setback for SBE. But the end result worked in their favor financially. The $2.25 a share is about 0.3 percent of the price of where the shares were trading when SBE and Morgans originally began talks.” Lane added
The deal, which was passed by the SBE Board, is expected to be completed late this year assuming that various regulatory approvals are forthcoming. The agreement is also subject to the refinancing of Morgans’ property loan agreements, and customary closing settlements, including a green light for the transaction by the company’s major shareholders who represent just under 30% of the firms outstanding shares of common stock.
SBE commented to press that it has procured assurances to finance the project through a combination of income from the selloff of new equity in the merged company to an outside investor, a new revolver and cash from the refinancing of its current loans.
Shizuoka Capital Wealth Management