Morgans Hotel Group acquires controlling interest in Light Group

Morgans Hotel Group acquired 90 percent controlling interest in Las Vegas nightclub operator The Light Group for approximately $46.5 million, the companies said Thursday.

The Light Group, which is headquartered in Las Vegas, operates many of the nightclub venues and several restaurants at Strip properties owned by MGM Resorts International.

The transaction is expected to close by the end of the year. Morgans will pay $28.5 million in cash when the deal closes, with the remaining $18 million subject to several conditions, including cash flow from The Light Group's businesses.

The Light Group founder and Chairman Andrew Sasson will join Morgans board of directors. Andy Masi will remain The Light Group's chief executive officer.

Jefferies & Co. gaming analyst David Katz said the deal "reflects (Morgans') focus on regaining its food and beverage cachet. It provides the company with incremental cash flow accretively, although the complexity of the deal and potential dilution partially offset some of the positives."

The Light Group's nightclubs include The Bank at Bellagio and Haze at Aria. The company's restaurants include Yellowtail Japanese Restaurant & Lounge at Bellagio and Diablos Mexican Cantina at the Monte Carlo. The company also manages pool lounges and bars.

Morgans said The Light Group generated approximately $7.7 million in cash flow over the 12 months that ended Sept. 30.

"We believe the acquisition of The Light Group will position us to increase our food and beverage profits, drive average daily rate growth at existing hotels and win and service new management agreements," Morgans CEO Michael Gross said in a statement.

Morgans, which is headquartered in New York, owned the Hard Rock Hotel in Las Vegas until a year ago. The company operates boutique-style hotels under various brands in New York, Los Angeles, Miami, San Francisco, Boston and in international locations.

"Given The Light Group's strong relationship with MGM, this transaction provides new opportunities to work with MGM on strategic partnerships," Gross said.

The Light Group is redoing the restaurant, bar and nightlife operations at Morgan's Delano Hotel in Miami's South Beach area.

Morgans said the acquisition would allow the company to recapture third-party management fees and revitalize food and beverage operations at other existing and future properties while adding new management contracts.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
Follow @howardstutz on Twitter.