Ron Burkle’s Yucaipa offers $8 a share for Morgans Hotel

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Billionaire Ron Burkle’s Yucaipa Cos. offered to buy Morgans Hotel Group Co. (MHGC) for $8 a share on Friday November 1, 13% more than the day’s closing price.

The offer, disclosed in a regulatory filing, has a total value of $261 million, based on 32.6 million shares outstanding as of August 6. Morgans fell 1% to $7.09 at the close of New York trading, and has risen 28% this year.

“Yucaipa, including our investment in Morgans, manages a substantial portfolio of hospitality-related assets with dedicated available resources to improve the operating performance of our companies,” Los Angeles-based Yucaipa said in the filing with the US Securities and Exchange Commission. “We are confident that this platform could deliver synergistic value to Morgans under our ownership.”

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The offer follows a demand in September by Yucaipa, which has beneficial ownership of about 27% of Morgans shares, that the hotelier put itself up for sale. Yucaipa last month filed a lawsuit accusing New York-based Morgans of undermining its right to have an observer attend the boutique-hotel operator’s board meetings.

Yucaipa said it would be able to complete an acquisition “expeditiously” and that Morgans should seek other bids “to see if it can get a higher price.”

Morgans, which operates luxury hotels in London, North America and Morocco under brands including Hudson, Delano and Mondrian, will review the proposal with its financial and legal advisers and “determine the appropriate response in due course,” it said in a statement.

Burkle also sued OTK Associates, which was founded by Jason Taubman Kalisman and holds about 14% of Morgans’ shares, in federal court in Manhattan in July, accusing the firm of misleading shareholders in proxy materials. Kalisman is the interim chief executive officer of Morgans.

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