Two troubled companies might merge into one new entity as the Wall Street Journal reported Friday that SBE Founder and CEO Sam Nazarian is in serious talks with Morgans Hotel Group to merge the two companies, as well as become the majority owner and CEO of the new venture.
Morgans has had significant C-suite turnover lately, and its share price has dipped some 30% over the past year. Nazarian’s recently opened SLS Las Vegas has reportedly been operating in the red, and earlier this year he took a 10-week leave of absence as result of admitting illegal drug use to Nevada gaming regulators.
Billionaire investor Ronald Burkle, who is Morgans’ largest creditor and owns preferred equity in the company, would take a seat on the board of the new company and is supposedly weighing additional investments in the combined company, according to people familiar with the talks.
The new company would manage 19 hotels in gateway cities under the SLS, Delano and Mondrian brands. SBE would also add its roster of fashionable restaurants and nightclubs.
A deal could be announced as early as this month, and the combined company would also be publicly traded as Morgans is today, sources told the Wall Street Journal.