Cain International Sells sbe Entertainment Group Stake to AccorHotels
The deal announced in late June valued Paris-based AccorHotels total investment in sbe at $319 million.
NEW YORK CITY—New York City-based Cain International has sold its 50% stake in the sbe Entertainment Group to AccorHotels.
The deal announced in late June valued Paris-based AccorHotels total investment in sbe at $319 million. The companies reported at the time that AccorHotels would acquire the 50% of sbe’s common equity held in part by Cain International for $125 million. Sam Nazarian, sbe founder, will continue to own the remaining 50% of sbe. In addition, AccorHotels would invest $194 million in a new preferred debt instrument that will be used to redeem all existing preferred units, also held in part by Cain International, a portfolio company of Eldridge Industries.
Cain International first took a stake in sbe Entertainment Group in December 2016, providing capital to institutionalize and dramatically scale the business through acquisition, development and repositioning of more than $1 billion in assets worldwide. The investment enabled the acquisition of Morgans Hotel Group, which more than doubled the number of hotels in sbe’s portfolio, including the SLS Hotel & Residences, Delano, Mondrian, Redbury, Hyde Hotel & Residences, Hudson, Sanderson and St Martins Lane, Cain reports.
Jonathan Goldstein, Cain International’s CEO and co-founder says, “In just over a year and a half, Cain International helped sbe Entertainment Group finance and institutionalize their business and acquire Morgans Hotel Group. The acquisition by AccorHotels will allow sbe to write its next chapter and is a testament to the current strength of the business and of Cain International’s successful investment strategy.”
AccorHotels and sbe in a joint announcement released today say AccorHotels’ investment “will allow sbe to leverage AccorHotels’ leading global hospitality platform while remaining an independent luxury lifestyle operator.” sbe will retain its global headquarters in New York. The company also has US operations in Los Angeles.
Sébastien Bazin, chairman & CEO, AccorHotels says of the deal, “I am very proud of this unique partnership. It combines the best of both groups by offering all our guests lifestyle concepts in the luxury segment. With sbe’s brand portfolio, AccorHotels is also taking a significant step forward in its group’s expansion in key gateway cities in the US. Sam Nazarian is an innovator with an inborn sense of creating unique experiences and groundbreaking hotels and F&B concepts. We are delighted to join forces and mutualize our skills for the benefits of our guests”.
Nazarian, founder and CEO of sbe, notes, “This partnership with AccorHotels marks the beginning of a new chapter in sbe’s history and I’m thrilled that this strategic partnership has now been completed. sbe has grown rapidly since the acquisition of Morgans Hotel Group in 2016.”
He adds the sbe portfolio will grow to more than 50 hotels by 2020 and has more than 50 global venues in its pipeline in its residential, culinary and entertainment segment. “The partnership with AccorHotels is only going to accelerate this growth both in the US and in international markets,” Nazarian notes.
Company officials say that sbe will accelerate its international growth with expansion into new markets outside of the US, including priority growth markets in the Middle East and Latin America. sbe’s pipeline includes projects in Atlanta, Chicago, Washington DC, Dubai, Rio de Janeiro, Mexico City, Cancun, Tokyo and Los Cabos.
Pryor Cashman LLP represented sbe Entertainment Group in the transaction. The team was led by partners Todd E. Soloway, John J. Crowe, Michael Dunworth, Teresa Lee, Ed Rayner, Rich Frazer, Jeffrey Johnson, Dyan Finguerra-DuCharme and Rich Levy, Jr., counsels Rebecca Schmutter, Matthew Young, Philippe Zylberg, and associates Michelle Pham, Kyle Miller, Gene Levin, Edward Cohen, Taylor Weinstein, Matt Repetto, Colinford Mattis, Ari Tran, LaKeisha Caton, Ari Buchen and Mark Zhuang , who advised sbe on the parties’ joint venture arrangement, equity and transaction tax structuring, financing and recapitalization, among other issues.