SBE Completes $805 Million Acquisition of Morgans Hotel Group

Nearly seven months after reaching a definitive agreement to acquire Morgans Hotel Group, the SBE Entertainment Group has completed its acquisition of the New York-based boutique hotel operator in a deal valued at $805 million.

As a result, the combined company will operate 22 hotels comprising almost 7,000 rooms across five different brands.

Notable properties included in the acquisition include Miami's 194-room Delano Hotel, the 878-room Hudson Hotel in New York City and San Francisco's 372-room Clift Hotel.

As part of the acquisition, investor Ron Burkle's private-equity firm Yucaipa Companies has converted preferred shares in Morgans into a 25 percent equity interest in SBE, while Burkle now has a seat on the board. What's more, real-estate investment firm Cain Hoy Enterprises now boasts a 25 percent equity stake in SBE in addition to a board seat.

SBE founder and CEO Sam Nazarian holds the remaining 50 percent stake.

"The acquisition of Morgans not only further expands our offering but brings the invaluable partnerships of Ron Burkle and Cain Hoy Enterprises," said Nazarian in a statement accompanying this week's announcement. "SBE will now have a presence from San Francisco to Doha; Los Angeles to London — and brings its impressive history, talented team and culture of service and innovation to the SBE family."

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While credited for pioneering the boutique hotel concept years ago, Morgans has fallen on hard times of late as it faces increased competition. SBE's acquisition takes the company private and ends its time as an independent company.

Looking ahead, SBE plans to open as many as four hotels in 2017, including a Mondrian property in Doha, Qatar and SLS hotels in New York and Seattle.

Over the next two years, SBE expects to open nine hotels total.

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