Sam Nazarian’s SBE, which manages luxury properties such as the SLS Beverly Hills and nightclubs including Hyde, is close to an agreement to merge with boutique lodging company Morgans Hotel Group Co., said two people with knowledge of the discussions.
The deal may be completed as early as this month, said one of the people, who asked not to be identified because negotiations are continuing. Nazarian, founder and chief executive officer of SBE, would lead the combined company and SBE would be its majority owner, the person said.
Morgans, which manages nine hotels in North America including the Delano South Beach in Miami, last year announced it hired Morgan Stanley to help explore strategic alternatives, including a sale. In 2013, the boutique-hotel company was targeted by both billionaire Ronald Burkle and an activist firm after a shareholder ouster of its board.
Morgans rose 7.9 percent to $5.63 at the close of trading. It was the company’s biggest one-day gain since November 2013, giving it a market value of $195 million.
Burkle, who owns preferred stock, notes and warrants in Morgans through his Yucaipa Cos., will be on the board of the combined company, said one of the people with knowledge of the talks.
Nazarian declined to comment. Burkle and Nathaniel Garnick, a Morgans spokesman with Sard Verbinnen & Co., didn’t immediately return telephone calls seeking comment.
The talks were reported earlier today by the Wall Street Journal.