sbe in Talks to Merge with Hakkasan Group

By Gail Kalinoski

Sam Nazarian, founder and CEO of sbe

New York—Several months after completing the acquisition of the Morgans Hotel Group, which more than doubled the hotels in its portfolio, sbe is looking to expand again, this time with a potential merger with nightclub and restaurant operator Hakkasan Group. One day after the Wall Street Journal reported sbe was in talks to combine with Hakkasan, Sam Nazarian, sbe founder and CEO, confirmed the news with a brief prepared statement.

“sbe is in advanced discussions with Hakkasan Group regarding a potential merger. As currently contemplated, sbe would welcome Hakkasan’s global portfolio of prestigious restaurants and best in class nightlife assets into sbe’s international platform of lifestyle hospitality and entertainment assets to create the most dynamic hospitality, residential, restaurant and entertainment company in the industry,” Nazarian said. The merger is expected to close within 60 days, he added.

Nazarian did not provide any monetary details about the possible merger, but WSJ noted the combined company would have an equity value of about $1 billion.

sbe, a privately-held leading lifestyle hospitality company that develops, manages and operates hotels, residences, restaurants and nightclubs, was founded by Nazarian in 2002. Nazarian owns half the company with Yucaipa Cos. with Cain Hoy Enterprises holding the remaining stakes.

With the acquisition of Morgans Hotel Group, sbe has 23 lifestyle properties in nine gateway markets and more than 135 hotel, entertainment and food and beverage outlets. sbe plans to open 13 hotels within the next two years, some with residences, including SLS Park Avenue in Manhattan; SLS Seattle; Mondrian Doha and Mondrian Dubai. The firm’s established hotel brands include SLS Hotels & Residences, Delano, Mondrian, Redbury, Hyde Hotel & Residences and Morgans. Katsuya, Cleo, The Bazaar by Jose Andres, Skybar and Hyde Lounge are among the restaurants and lounges owned by sbe.

This merger would allow sbe to offer more restaurant and clubs in its hotels and provide Hakkasan with more hotels to locate its nightlife offerings in. sbe would also add more Las Vegas nightclubs to its portfolio as Hakkasan owns 12 clubs there, including Omnia at Caesars Palace and Hakkasan at MGM Grand, according to WSJ.

Hakkasan Group is owned by Alliance International Investments LLC, an Abu Dhabi-based investment company. The firm has restaurants and nightclubs in North America, Europe, Middle East and Asia, including Hakkasan, Ling Ling, Sake no Hana, Herringbone and Searsucker restaurants and Hakkasan Nightclub, Wet Republic, Omnia and Jewel nightclub offerings.

While we don’t know how much sbe would pay for Hakkasan yet, we do know the Morgans Hotel Group deal, which closed in early December, was estimated at $805 million. That deal doubled sbe’s holdings and placed the well-known Delano and Mondrian brands into sbe’s hotel portfolio, including the 194-key Delano Hotel in South Beach, Miami.

Also in December, sbe teamed up with The Related Group to develop two mixed-use properties in Mexico. The condo hotel projects in Guerrero and Quintana Roo will be operated by sbe’s SLS brand. That deal was announced less than two months after sbe and The Related Group opened the 55-story SLS Brickell Hotel & Residences in Miami, also a condo hotel property.