Mohari Hospitality, an investment company focused on luxury lifestyle and hospitality sectors, will acquire Tao Group Hospitality in a deal that values the high-end restaurant business at $550 million.
Mohari, led by Mark Scheinberg, is acquiring the company from Madison Square Garden Entertainment Corp. (MSGE), owned by billionaire James Dolan and other limited partners.
MSGE will receive around $300 million in net cash proceeds from the sale.
The deal is expected to close in May, subject to customary closing conditions.
Mohari is expected to take over MSGE’s 66.9% majority interest and stakes of other third-party investors. The company will own Tao Group alongside management, including co-CEOs Noah Tepperberg and Jason Strauss.
“Over the last 20 years, we have been laser-focused on building premium guest experiences and a company with a global influence in all areas of hospitality, entertainment and pop culture,” said Noah Tepperberg, co-CEO of Tao Group. “Mohari’s shared vision, coupled with the strength of its portfolio and leadership, make it an ideal partner as we look at the next chapter for Tao Group.”
Mohari will bring its real estate development and hospitality management experience to Tao Group, especially for projects like the recently announced Tao Hotel in Orlando, Fla.
Aside from expanding Mohari’s already broad portfolio of assets, the acquisition provides the company with a platform and management team that will accelerate its expansion plans and extend its footprint in leading destinations.
Schienberg, who founded Mohari in 2017, was also the founder of PokerStars, the online gambling company which he reportedly sold for around $5 billion.
Tao Group, which acquired Hakkasan Group in April 2021, has more than 80 branded locations in over 20 markets across four continents, including TAO, Hakkasan, OMNIA, Marquee, LAVO, Beauty & Essex, Ling Ling, Wet Republic, Yauatcha, Cathédral, The Highlight Room, Jewel, Sake No Hana and Little Sister. In fiscal 2022, the group generated around $485 million in revenue, $37 million in operating income and $67 million in adjusted operating income.
“Tao Group has grown from an innovator in nightlife to a leader in premium lifestyle and hospitality. Its global footprint of more than 80 branded locations in over 20 markets and best-in-class management infrastructure speaks to the Group’s tremendous potential,” said Mohari’s Managing Partner, J. Allen Smith. “We look forward to working with Noah Tepperberg, Jason Strauss and the rest of the dynamic management team to continue growing Tao Group’s business.”
Tao Group will complement Mohari’s current portfolio of luxury and lifestyle properties and operating companies, including the Peninsula Papagayo in Costa Rica, anchored by a Four Seasons luxury resort; Centro Canalejas Madrid, featuring the Four Seasons Madrid; and The Ritz-Carlton Yacht Collection.
Tao Group will enter into a multi-year agreement with MSGE for ongoing consulting, marketing, and support services at Madison Square Garden and Sphere in Las Vegas as part of the deal. The company acquired a majority stake in Tao Group in 2017.
The move comes as MSGE completes a reorganization plan, which will see it separate its live entertainment business and create a new entity for it.
For Mohari Hospitality, Moelis & Company LLC served as financial advisors, Kirkland & Ellis LLP served as legal advisors and Deloitte served as accounting and tax advisors.
For Tao Group Hospitality, Goldman Sachs & Co. LLC served as financial advisor, Hughes Hubbard & Reed LLP served as legal advisor and Ernst & Young LLP served as accounting advisor.