Last updated: 01:36 PM ET, Fri May 27 2016

SBE Agrees to Acquire Morgans Hotel Group

Hotel & Resort | Patrick Clarke | May 10, 2016

SBE Agrees to Acquire Morgans Hotel Group

PHOTO: SBE Entertainment Group's portfolio includes the SLS Hotel & Casino Las Vegas, pictured. (Photo courtesy of SLS Las Vegas).

SBE Entertainment Group announced Monday that it has reached a definitive agreement to acquire Morgans Hotel Group in an all-cash transaction valued at nearly $800 million, the Miami Herald reported.

Founded in the mid-1980s, Morgans is largely credited for pioneering the boutique hotel concept.

Through the agreement, the combined company will own or operate 20 boutique and upscale hotels in destinations that include Miami, London and New York.

The merger is expected to be completed in the fall.

In addition to acquiring all of Morgans' brands, SBE will take ownership of the Delano Hotel in South Beach, the Hudson Hotel in New York City and the Clift Hotel in San Francisco.

SBE founder, chairman and CEO Sam Nazarian said the company "intends to invest significant funds to revitalize" the three aforementioned properties.

Los Angeles-based SBE said that Nazarian will retain both majority ownership interest in the company and day-to-day management responsibilities.

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"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," said Nazarian in a statement.

SBE already has an impressive pipeline of its own with 19 new hotels in various stages of development.

"SBE will leverage best-in-class brands across the combined company,'' added Nazarian, "further driving both short- and long-term revenue growth."

READ MORE: Unlikely Couple Expanding Boutique Hotel Brand in North Carolina

Under the terms of the agreement, SBE will receive a notable investment from global real estate investment company Cain Hoy Enterprises, while the Yucaipa Companies will convert its existing stake in Morgans into an ownership interest in SBE.

The latter will receive 25 percent common equity in SBE.

Yucaipa founder Ron Burkle and Cain Hoy head Jonathan Goldstein will join Nazarian on SBE's board of directors.

Although the two companies had been engaged in talks for some time dating back to early last year, SBE is clearly the big winner in this agreement having landed a much cheaper price than originally forecasted, per the Wall Street Journal.


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