SBE Entertainment to buy Morgans Hotel Group in an $800 mn deal

US hotel operator SBE Entertainment Group yesterday agreed to buy Morgans Hotel Group Co in an $800-million deal.

SBE has offered to pay $2.25 per share in cash, a premium of 69 per cent over Morgans' closing price on 5 May 2016. The total equity value is around $82 million and the total enterprise value, including assumption of debt, is around $794 million.

Morgans shareholders representing approximately 29 per cent of the company's outstanding shares of common stock have signed voting agreements in support of this transaction, including OTK Associates, Pine River Capital Management and Vector Group Ltd.

Affiliates of The Yucaipa Companies have also signed a voting agreement in respect of their Series A preferred securities and warrants.

Post-closing, SBE will acquire Morgans' portfolio of 13 owned, operated or licensed hotel properties in London, Los Angeles, New York, Miami, San Francisco, Las Vegas and Istanbul, including its Hudson New York and Delano South Beach properties.

SBE is currently working with the lenders to assume the mortgages of the Hudson and Delano properties, approximately $422 million, and expects this to occur at closing.

Founded in 2002, Los Angeles-based SBE is a hospitality, real estate and entertainment company.

Led by chairman and CEO Sam Nazarian, the company owns hotels, restaurants, nightlife and real estate groups. It has over 100 properties currently operating or in development.