By Ben Glickman
The super rich are still obsessed with Soho House after all.
The chain of swanky clubs with outposts in New York and London had been losing its cachet after a rapid expansion and growing membership wore away at its air of exclusivity. Now, Dan Loeb and his activist hedge fund Third Point are questioning a bid backed by fellow billionaire Ron Burkle to take the club private.
Loeb unveiled a nearly 10% stake in the company in a regulatory filing Wednesday. In a letter to its board, Loeb argued that the $1.7 billion offer was a "sweetheart" deal that resulted from an opaque process.
The offer was supported by a consortium of investors including supermarket mogul Burkle, who has served as Soho House's chairman since his investment firm The Yucaipa Cos. acquired a majority stake in 2012.
"While we applaud the decision to return the company to private ownership, it appears to us that the board has failed to perform its most important responsibility: to ensure a fair sales process that achieves maximum value for all shareholders," Loeb wrote.
The $9-per-share bid announced last month represented a significant premium to where the stock had been trading.
Loeb is pushing the board to consider outside bidders, who he said would pay a better price for the company, and said members would benefit from a visionary new owner. Loeb is one of the best known hedge-fund managers of his generation and in recent years has pushed for change at Advance Auto Parts and Bath & Body Works.
Representatives for Burkle and Soho House didn't immediately respond to requests for comment.
Soho House was founded in London in 1995 and became a place where the rich could enjoy a cocktail with the hope of rubbing elbows with celebrities and power brokers. It opened a New York outpost in 2003 and saw its profile rise after being featured in an episode of "Sex and the City," with Samantha's struggles to get into the club burnishing its cred as a hangout spot for the elite.
The chain expanded, and had more than 42 clubs as of the end of 2023. Complaints of overcrowding and surging membership have weighed on Soho House, which stopped accepting applications in some cities in recent years. Annual memberships start at around $3,150 for those over 27, according to its website.
Shares of Soho House were up 4.6% in afternoon trading Wednesday.
Write to Ben Glickman at ben.glickman@wsj.com
(END) Dow Jones Newswires
January 29, 2025 12:22 ET (17:22 GMT)
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