Morgans Hotel Group Co (MHGC)

[Enterprising Investor]

Ron Burkle trying to resurrect Morgans Hotel deal (5/05/16)

Ron Burkle and Sam Nazarian’s SBE Entertainment Group are close to a deal to buy the boutique hotel chain Morgans Hotel Group, The Post has learned.

Burkle, the billionaire investor who owns part of the NHL’s Pittsburgh Penguins, has been locked in a years-long battle with Jason Kalisman, a Morgans board member and grandson of Alfred Taubman, for control of the Ian Schrager-founded chain.

Kalisman was Morgans’ chairman for the two years ended May 2015.

Burkle had tried earlier to buy the company but his offer was rejected by Morgans’ board of directors.

But now, after the long battle — and with the company’s shares down 60 percent this year, to Thursday’s close at $1.33 — the board is ready to sell to Burkle and SBE, two sources close to the situation said.

“They are working on resurrecting the transaction they shot down,” a source said.

In the failed fall 2015 deal with Nazarian’s privately held SBE, which owns several Los Angeles clubs, SBE would have merged with Morgans — owner of the Hudson Hotel in Columbus Circle, and the Delano South Beach and other properties.

Burkle would have become chairman of the combined companies, and personally acquired two Morgans hotels.

Kalisman blocked the deal back then, but is more open to a sale this time around, sources said. The exact structure of the new merger could not be learned.

Kalisman, through OTK Associates, is still the largest Morgans shareholder with a 13 percent stake it acquired at an average $15.20 per share.

Burkle, who has long eyed Morgans, bid $8 a share for the chain in 2013.

His Yucaipa Companies over the years has flexed the legal right it gained by lending Morgans $75 million in 2009 to block significant sales of Morgans assets to anyone else, sources said.

Morgans’ annual meeting is slated for May 12. It declined comment. Burkle did not return calls.

http://nypost.com/2016/05/05/ron-burkle-trying-to-resurrect-morgans-hotel-deal/