Sam Nazarian still wants to buy the beleaguered nightlife company that has faced scandals over their ownership and investments the last year. In a presser from SBE Entertainment, the management company of the Strip’s SLS Las Vegas, the company insists it’s still planning to merge with Hakkasan, despite the alliance taking much longer than expected.
“SBE remains in negotiations to complete a financial transaction in which [its own] and Hakkasan’s formidable hospitality assets are combined into one company. We are looking forward to completing the transaction,” a press release stated.
Nazarian owns about 64 percent of the company he founded, with private equity investors controlling the remaining stake. Hakkasan Group is owned by Alliance International Investment, a Dubai-based investment firm that is rumored to have ties according to investigations to money laundering. Additionally, Hakkasan hasn’t filed the legally required accounting in the UK.
The merged company would have a valuation of $1 billion, according to the Wall Street Journal. Nazarian said in March that the formation will create “the most dynamic hospitality, residential, restaurant and entertainment company in the industry.”
Las Vegas is the mecca of the sexy party scene, and Hakkasan dominates that space. In addition to its MGM flagship nightclub (and others), the company operates lounges and pools at the Mirage, Bellagio, Aria, and Caesars Palace.
Hakkasan additionally opened Level Up last year at the MGM Grand, a gaming and entertainment lounge geared towards millennials. With skill-based gaming machines and interactive sports gambling competitions like virtual golf, MGM is hoping the digital playground created by Hakkasan strikes the perfect balance between arcade gaming and traditional gambling.
Nightclub & Bar Convention and Trade Show Advisory Board Chairman Thom Greco told the Review-Journal recently that SBE Entertainment will benefit from Hakkasan’s “swagger” and expertise in creating spaces that allow boutique hotels to stand out in a crowded industry.
Reason for Holdup
One potential reason for the continued merger delay might be the pending sale of SLS Las Vegas, SBE’s first foray into gambling that ended up costing Nazarian tens of millions of dollars.
After undergoing a $415 million renovation to transform the Sahara into SLS Las Vegas in 2014, and controversy surrounding the gaming license issuance due to Nazarian’s past felony convictions, the businessman began selling down his stake in the property as the new concept failed to entice locals and visitors to the Strip’s northern end.
Stockbridge Capital, which endured the financial nightmare with Nazarian, now controls majority ownership of the resort. SLS continues managing its operations. In May, Stockbridge agreed to sell the troubled resort for an undisclosed price to Reno’s Grand Sierra Casino owners, the Meruelo Group.
That impending sale could have impacted finalizing the negotiations in what SBE hopes will be a better investment for the company.