LONDON - Soho House & Co's Executive Chairman, Ron Burkle, has issued a statement to shareholders amid speculations about the company's potential privatization and recent performance discussions. The statement comes after concerns about leaked information from a special committee process.
Burkle highlighted the profitability of Soho House's established locations, noting that houses in their second five-year period exhibit significant profitability and contribute to the network's long-term value. He pointed out that approximately half of the company's houses are still under five years old, suggesting a substantial embedded value that is expected to increase as these locations mature.
The chairman addressed the tension between short-term profits and long-term value creation for public companies, emphasizing his focus on the latter. He remarked on the substantial control held by the board and affiliates, owning roughly 75% of the stock, and the limited public shares available. Burkle suggested that the current stock price could allow the company to go private without the need for additional funding from the controlling shareholders.
Burkle also discussed the costs associated with being a public company, including a recent forensic audit conducted by an outside firm, which confirmed no issues but diverted management's focus and resources. He expressed his internal debate over whether Soho House should remain public, given the inquiries about taking the company private.
The statement clarified that while there is no current bid from Burkle, any proposal would require him to roll his shares into the deal, necessitating the formation of a special committee to ensure fairness and transparency. Burkle reaffirmed his long-term commitment to the company and his belief in its value.
Soho House & Co, known for its membership-based business model, operates a global network of clubs and other hospitality ventures. Despite its unique market position and low attrition rates, Burkle suggested that the public market might not fully appreciate the company's value, contrasting with the interest from private buyers.
The information provided is based on a press release statement from Soho House & Co.
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