The 13D Report
The 13D Report
Shareholder activism
⌘K
Signup free
activistletters

Soho House & Co Inc. (SHCO): Third Point Opposes “Sweetheart Deal,” Urges Fair Sale Process Beyond Ron Burkle’s Control

Summary

Third Point, owning 9.9% of Soho House’s Class A shares, criticizes the board for approving a private sale to Chairman Ron Burkle (Yucaipa) through a non-transparent process, calling it a “Sweetheart Deal.” They argue the board failed to uphold its fiduciary duties under Delaware law, given Burkle’s control via super-voting shares. Third Point urges the board to open the sale process to external bidders, asserting that independent offers could deliver higher value and better outcomes for shareholders and Soho House members.

Dear Soho House Director:

Third Point currently owns 9.9% of the Class A shares of Soho House & Co Inc. (“Soho House” or “the Company”). We were also cornerstone investors in the Company’s Initial Public Offering in 2021.

While we applaud the decision to return the Company to private ownership, it appears to us that the Board has failed to perform its most important responsibility: to ensure a fair sales process that achieves maximum value for all shareholders. Instead, the Board appears to have engaged in an opaque process that resulted in a transaction (the “Sweetheart Deal”) with the Company’s Chairman, Ron Burkle of Yucaipa.

As you are no doubt aware, transactions involving controlling stockholders (in this case due to super-voting stock, not a majority economic interest) are subject to the most exacting standards under Delaware law. It appears to us that the Board’s conduct will not come close to satisfying these standards, thereby exposing both the Board and Mr. Burkle to liability for failing to discharge their fiduciary duties of loyalty and care.

Mr. Burkle’s obvious conflicts of interest and undue influence on the board via his supervoting share class make it imperative that the Board open the sale process to outside bidders. We believe that numerous qualified parties with significant experience investing in the hospitality industry would be interested, and willing to pay a superior price to Mr. Burkle’s Sweetheart Deal.

An independent, fairlyvalued transaction by a qualified group would benefit not only Soho House’s shareholders, but also its members, many of whom share the view that a fresh start with visionary owners is necessary for the company to maintain its position in the hospitality sector in the years ahead.

Sincerely,
/s/ Daniel S. Loeb
Daniel S. Loeb
CEO

Source:

https://www.sec.gov/Archives/edgar/data/1040273/000095017025010206/ck0001669811-ex99_3.pdf

Member discussion

More like this

STAAR Surgical (STAA): Broadwood Partners Urges Shareholders to Reject Alcon Merger Over Governance and Valuation Concerns

Summary Broadwood Partners’ presentation argues that STAAR Surgical’s sale to Alcon is ill-timed, flawed, and undervalued. It claims STAAR’

Khrom Capital Pushes Acadia Healthcare (ACHC) Board to Pursue Sale, Slams Entrenched Leadership and Poor Capital Allocation

Summary Khrom Capital, owning 5.5% of Acadia Healthcare, criticized the company’s decade-long underperformance, poor capital allocation, and entrenched

STAAR Surgical (STAA): Broadwood Capital Urges Shareholders to Reject Alcon Merger, Highlighting Governance Conflicts and Poor Timing

Summary Broadwood Capital, owning 27.5% of STAAR Surgical, urged shareholders to vote against the proposed $28-per-share sale to Alcon,

Al Hartman Presses Silver Star Properties REIT (SLVS) Holders: Reject Current Board, Back Liquidation Plan Amid Alleged Misconduct and Value Destruction

Summary Al Hartman’s Hartman Shareholder Alliance urges Silver Star investors to vote the BLUE proxy as a “last chance”

Broadwood Partners Challenges STAAR Surgical (STAA) Sale to Alcon, Citing Inopportune Timing, Governance Issues, and Undervaluation

Summary Broadwood Partners, STAAR Surgical’s largest shareholder with a 27.5% stake, urged stockholders to vote against the proposed

Yunqi Capital Challenges STAAR Surgical (STAA)–Alcon Deal, Citing Undervaluation, Weak China Outlook Assumptions, and Governance Failures

Summary Yunqi Capital, a 5.1% shareholder of STAAR Surgical, announced it will vote against the company’s proposed $28