sbe Faces Rival Bid for Morgans Hotel Group

NEW YORK—Morgans Hotel Group Co. has received a revised takeover proposal from a rival suitor and is planning to adjourn a special meeting today of stockholders to evaluate it, according to the company.

In May, sbe reached an agreement to acquire Morgans Hotel Group in an all-cash transaction, a move that sbe said will further strengthen its position as a global leader in lifestyle hospitality management, entertainment, F&B and development.

The bid from the group identified in Morgans’ proxy materials as “Bidder V” reconfirms their interest in pursuing an acquisition of the common stock of Morgans for $2.75 per share, according to the company. As part of its submission, Bidder V also furnished to Morgans a letter of intent from a new potential financing source that indicated this financing source is prepared, subject to due diligence and definitive documentation, to provide up to $500 million in capital to support the transaction and provided to Morgans an executed non-disclosure agreement in the form previously requested by Morgans.

As disclosed in proxy materials previously filed by Morgans with the SEC:

Bidder V had, on July 18, submitted an unsolicited, preliminary proposal for an acquisition of the common stock at $2.75 per share. Subsequent to July 18, members of management of Morgans, individual board members and the company’s legal and financial advisors had reached out on various occasions and had discussions with Bidder V and its representatives to encourage Bidder V to execute a non-disclosure agreement and to work towards a definitive proposal, and to do so in a timely fashion given the rapidly approaching date of Sept. 14 for the stockholder vote on the SBE transaction.

However, Bidder V had declined to sign a non-disclosure agreement in the form required by Morgans and had not made any further proposal to Morgans following its preliminary proposal. On Sept. 8, 2016, Bidder V had contacted a member of the board to indicate that Bidder V was continuing to work on a proposal, but no proposal was received until the evening of Sept. 13.

At a meeting of the board of directors on the morning of Sept. 14, the members of the board present—Brad Nugent recused himself—concluded after receiving advice from Morgans’ legal advisors that, in light of the latest proposal from Bidder V, Morgans is required to adjourn the special meeting of stockholders in order to allow stockholders additional time to consider supplemental disclosures regarding the latest proposal from Bidder V.

This adjournment will also allow the board and its advisors, consistent with the board’s fiduciary obligations to evaluate any third-party proposal that would reasonably be expected to lead to a superior proposal, to obtain, and provide to stockholders, additional information concerning the proposal by Bidder V.