Nazarian’s SBE agrees to buy Morgans Hotel Group

Sam Nazarian’s hotel and nightclub company has announced plans to acquire a boutique hotel company, Morgans Hotel Group, in a deal worth $794 million.

Nazarian, who started as a nightclub mogul in Los Angeles, is the majority owner of SBE and will retain day-to-day operations after the deal. The acquisition includes the luxurious boutique Mondrian Los Angeles in West Hollywood.

In the proposed transaction, SBE will pay $2.25 for each outstanding share, or about 70% above the closing price on May 5. As part of the deal, Yucaipa Cos., an investment firm owned by Ron Burkle, will convert $75 million of its existing stake in Morgans into ownership interest in SBE and leasehold interests in three Las Vegas restaurants now held by Morgans.

Once the deal is closed, SBE will have 20 hotel properties, including Morgans’ portfolio of 13 owned, operated or licensed hotels in London, Los Angeles, New York, Miami, San Francisco, Las Vegas and Istanbul. SBE already operates about 80 restaurants and clubs including popular brands like the Bazaar by Jose Andres, Hyde Lounge and the Redbury.

“Morgans’ Board of Directors carefully considered all of the alternatives available to us and we are pleased to have arrived at a transaction that we believe is in the best interests of our shareholders, while providing a great home for our attractive assets under a renowned hospitality company in SBE,” Morgans Chairman Howard M. Lorber said.

Subject to regulatory approvals, the deal is expected to close in the third or fourth quarter of the year.

hugo.martin@latimes.com

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UPDATES:

7:56 p.m.: Updates with additional details and background