Investment firm Mohari Hospitality announced Monday plans to acquire Tao Group Hospitality. The transaction values Tao Group at $550 million.
Mohari is purchasing the company from Madison Square Garden Entertainment Corp., a conglomerate of restaurants, nightlife, and entertainment owned by billionaire James Dolan. It will take over MSG Entertainment’s 66.9 percent majority interest as well as stakes of other third-party investors. The hospitality firm will own Tao Group alongside management, including co-CEOs Noah Tepperberg and Jason Strauss.
MSG Entertainment in 2017 bought 62.5 percent majority interest in Tao Group for $181 million. It will net cash proceeds of about $300 million from the sale. The deal should close in May.
Tao Group has more than 80 branded locations across 20-plus markets and five continents, such as TAO, Beauty & Essex, Ling Ling, Wet Republic, and Little Sister. In December, Tao opened Sake No Hana, a New York City-based Japanese concept. In fiscal 2022, Tao Group generated about $485 million in revenue, $37 million in operating income, and $67 million in adjusted operating income.
“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,” Tepperberg, co-CEO of Tao Group, said in a statement. “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. We are excited to build this partnership to scale our companies together.”
Mohari, which focuses on luxury lifestyle and hospitality sectors, believes Tao Group’s concepts will complement its portfolio. Some existing Mohari properties include the Peninsula Papagayo resort in Costa Rica, the Centro Canalejas Madrid hotel in Spain, and the Ritz-Carlton Yacht Collection, which sets sail to the Mediterranean, Caribbean, Central America, and South America.
The new owner said it will bring real estate development and hospitality management experience to Tao Group, particularly for recent projects like the upcoming Tao Hotel in Orlando. J. Allen Smith, a managing partner for Mohari, was previously the president and CEO of Four Seasons Hotels and Resorts.
“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,” Smith said in a statement. “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.”
Mohari was founded by entrepreneurial investor Mark Scheinberg in 2017. He described the pending acquisition as a “major strategic milestone” for his company.
“We’re excited about the prospects for the combined business and the transformational potential of our partnership,” Scheinberg said in a statement. “Noah and Jason have built a world class and industry leading organization and I’m personally thrilled to have their leadership and entrepreneurial spirit joining the Mohari family. The combination of our assets, brands and teams creates a unique global platform to further realize our vision and expand on our ambition in the hospitality space.”
As a part of the transaction, Tao Group will enter into a multi-year agreement with MSG Entertainment for ongoing consulting, marketing, and support services at Madison Square Garden and Sphere in Las Vegas.
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.