M&A Arb: Betting Against Soho House (SHCO)
Why we speculate that the take private deal won't go through
Key Highlights
Company received a $9/share take-private offer a week before Christmas contingent on certain stakeholders rolling their equity.
One of the largest shareholders, Ron Burkle of Yacaipa Companies, is in favor of the deal happening.
This is not the first time an offer has come through with a ‘substantial premium’ and has been rejected.
Not confident that the other largest stakeholders want to be taken private and perhaps “lose control” of their ability to execute on strategy.
We think this offer is not as solid as investors might hope, so the market is assigning a mere 55% of happening despite no regulation risk.
Disc: We are short Soho House (SHCO) which we disclosed Friday morning.