Sources familiar with the matter have told Reuters that the talks have been on and off since late last year, although a deal is uncertain at this time.
It comes after Soho House, which is listed on the New York Stock Exchange, announced last month that it had formed an independent special committee to ‘evaluate certain strategic transactions, some of which may result in the company becoming a private company’.
In a letter to shareholders, Ron Burkle, executive chairman of the Soho House board, addressed the Reuters report and said that he expects to be an owner of the company for a long time.
He said: “To be clear, I want to and intend to be an owner for the long haul, but at this time I’m not part of a group and haven’t made a bid (although I’m not prohibited).
“We were shocked when it came to my attention that certain information from the special committee process had been leaked.
“Neither the broader board nor management have been part of the special committee process, making this potential leak particularly concerning to us, and warranted this statement.
“To be clear, I’m not part of any bid at this time, but any proposal that may be on the table requires me to roll my shares. Hence, the current need for a special committee.”
Burkle also defended the company after it came under siege in a short seller report by GlassHouse Research, which criticised the company’s model and accounting.
The billionaire entrepreneur said he made hundreds of investments, but ‘none with a business model I like better than Soho House’.
“It’s hard to read that we aren’t profitable when our Houses are very profitable and create tremendous long-term value as an in-place network,” he continued.
“I feel the real focus should be on mature Houses that are in their second 5- year period of their growth curve, when the profitability and durability of the units really kicks into gear.
“With approximately half our Houses still less than five years old, we have substantial embedded value that will grow as those Houses mature, even before adding a single new House.
“Public companies always have a tug of war over short term vs. long term profits. I’d again emphasise that this (to me) should be about value creation more than anything.”
He added that the company had spent significant time and resources commissioning an independent audit to respond to the critical report from Glasshouse Research, which sensationally claimed that the company was ‘worth zero’.
In its recent financial results, Soho House reported a loss of $118m (£93m) for the year ended 31 December 2023 off a total revenue of £1.1bn, an improvement on the $221m it lost from a revenue of $972m in 2022.
Membership revenues increased 32.5% year-over-year to $361.5m, while in-house revenues grew 13% to $482.1m.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) rose from $61m to $128m, which CEO Andrew Carnie said reflected the group’s ‘continued focus on driving a better member experience’.
