sbe Entertainment Sells 50% Stake to AccorHotels

NEW YORK—sbe Entertainment Group—owner of major hospitality brands including SLS, Delano, Mondrian, Hyde, Katsuya and Cleo—has closed on the strategic sale of a 50% interest in the company to Paris-based AccorHotels in a transaction valued at $319 million. The deal closed today. Pryor Cashman represented sbe in the deal.

In June, AccorHotels and sbe Entertainment Group signed a letter of intent and entered into exclusive negotiations with AccorHotels. AccorHotels will acquire the 50% of sbe’s common equity held in part by Cain International for $125 million. Sbe founder Sam Nazarian will continue to own the remaining 50% of sbe and run the company independently. In addition, AccorHotels will 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.

AccorHotels owns, manages and franchises a broad portfolio of more than 4,500 hotels and properties across the globe, with a focus on Europe and Asia-Pacific. The transaction will enable sbe to enhance its presence in its core markets in North America and strengthen its ongoing expansion into new hospitality markets, including Latin America and the Middle East.

The Pryor Cashman team—led by partners Todd E. Soloway, John J. Crowe, Michael Dunworth, Teresa Lee, Ed Rayner, Rich Levy, Jr., counsel Rebecca Schmutter, and associates Michelle Pham, Kyle Miller, Gene Levin, Edward Cohen, Taylor Weinstein and Matt Repetto—advised sbe on the transaction, as well as a variety of complex related issues, including the parties’ joint venture arrangement, equity and transaction tax structuring, financing and recapitalization.

“This deal will propel sbe’s brands and Sam Nazarian into the upper echelons of the hospitality industry. The growth and market presence will be explosive. We at Pryor Cashman are proud that sbe placed their faith in our firm to deliver on such a complex and mission-critical deal,” said Soloway.

This transaction supplements the firm’s long track record of working with sbe and Nazarian, including representing sbe in negotiating management, license and development contracts as part of sbe’s global expansion; the disposition of the Hudson Hotel in New York City; the monitoring, enforcement and disposition of the companies’ intellectual property; and the disposition of the Clift Hotel in San Francisco.