Soho House & Co Inc. Merger Update

Hey there! Let's break down some recent news about Soho House & Co Inc. (you know, the company behind those cool members-only clubs). Think of this as me explaining it to you over coffee, without all the confusing finance talk.

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1. What happened? (in plain English - the actual event)

So, the big news is that Soho House & Co Inc. is in the process of being acquired (merged) by EH Parent LLC, an affiliate of The Yucaipa Companies LLC. This means the company will eventually become privately owned.

The recent development is that this merger hit a snag: a key investor, MCR Hospitality Fund IV LP ("MCR"), backed out of a significant $200.0 million funding commitment they had made for the deal. This put the merger's closing at risk.

However, Soho House and the buyer quickly found alternative ways to cover that $200.0 million gap. They secured new commitments from several sources:

• Morse Ventures Inc. (an entity related to MCR's Chairman/CEO) committed $50.0 million.
• MCR itself decided to still contribute $50.0 million (down from their original $200.0 million).
• Soho House Holdings Limited (a related entity) increased its debt facility (basically, borrowed more money) by $70.0 million from Apollo and GS Principal Investors. (Note: Apollo also reduced an existing equity commitment by $20.0 million, so this debt increase helped cover that too).
• Existing major shareholders (like the GS Funds and Mr. Richard Caring) agreed to "roll over" more of their shares. This means instead of cashing out, they'll keep their shares in the new private company, which reduces the amount of cash needed to close the deal.

In short, they patched up a big funding hole, making it much more likely the merger will go through as planned.

2. When did it happen?

The original merger agreement was announced on August 15, 2025. The funding issue arose when MCR informed Yucaipa on January 5, 2026, that they couldn't fund their full commitment. This specific news about securing the alternative funding dropped on January 13, 2026, and January 14, 2026.

3. Why did it happen? (context and background)

This specific announcement happened because the merger, which was already agreed upon, faced a major funding challenge when one of the key financial backers (MCR) significantly reduced its commitment. The company and the buyer (Yucaipa) had to quickly find new money to ensure they could still complete the acquisition.

While the reasons for the original merger might involve things like the company's financial performance, growth plans, or market conditions, this particular news is all about making sure the already planned merger has the cash it needs to close.

4. Why does this matter? (impact and significance)

This is a pretty big deal because:

• Merger Certainty: It significantly increases the likelihood that the acquisition of Soho House will actually happen. Before this news, there was a big question mark over whether the deal could close due to the funding gap.
• Stock Price Stability: When a merger faces funding issues, the stock price can drop because investors worry the deal might fall apart. By securing the funding, this news often helps stabilize or even boost the stock price closer to the agreed-upon merger price.
• Future Ownership: This confirms that Soho House is on track to become a private company under Yucaipa's ownership, which will change its long-term direction and strategy away from public market pressures.

5. Who is affected? (employees, customers, investors, etc.)

• Investors (like us!): This is probably the most directly affected group. If you own shares in Soho House, the increased certainty of the merger means you're more likely to receive the agreed-upon cash price for your shares (or participate in the rollover if you're a major shareholder like GS Funds or Mr. Caring).
• The Buyer (Yucaipa/EH Parent LLC): They successfully navigated a major hurdle and are now much closer to completing their acquisition of Soho House.
• The New Funders: Morse Ventures, Apollo, GS Principal Investors, and the existing shareholders who increased their rollover commitments are now key financial players in the new, private Soho House.
• MCR: They reduced their commitment but are still involved with a smaller contribution.
• Employees and Customers: While this specific funding news doesn't directly change their day-to-day, the overall merger will eventually bring changes to the company's operations, strategy, and potentially services or club openings.

6. What happens next? (immediate and future implications)

• Merger Closing: The next big step is for the merger to officially close. There might be some final paperwork and regulatory approvals, but the major funding hurdle has been cleared.
• Finalizing Commitments: Morse Ventures' $50.0 million commitment is backed by a "Third Party Secured Note Facility" which still needs "customary diligence and the execution of definitive documentation." This is a detail to watch, but generally, these are expected to go through once announced.
• Going Private: Once the merger closes, Soho House & Co Inc. will cease to be a publicly traded company, and its stock will no longer be listed on the NYSE.

7. What should investors/traders know? (practical takeaways)

• Merger Arbitrage Opportunity: If the stock is currently trading below the announced merger price, and you believe the deal will close, there might be a short-term opportunity to profit from the price converging to the merger price.
• Risk Reduction: The biggest risk for this merger – the funding gap – has largely been addressed. This makes the deal much more secure.
• Limited Upside Post-Merger: Remember, once the merger closes, the stock will no longer trade publicly. So, any investment decision should be based on the merger terms and the likelihood of closing, not on long-term growth as a public company.
• Watch for Final Closing: Keep an eye out for the official announcement that the merger has been completed.

In short, Soho House's journey to becoming a private company hit a bump in the road, but they've successfully navigated it. The merger is now much more likely to proceed, which is good news for investors hoping for the deal to close.