(Reuters) - Madison Square (NYSE:SQ) Garden Entertainment Corp on Monday agreed to sell its stake in Tao Group Hospitality to realty-focused investment firm Mohari Hospitality in a deal that values the high-end restaurant business at $550 million.
MSG Entertainment will receive about $300 million in net cash proceeds from the sale, which is expected to close in May, it said in a statement.
The company had in 2017 acquired a majority stake in Tao Group, which operates nightclubs and fine dining restaurants in more than 20 markets and generated about $485 million in revenue in fiscal year 2022.
Mohari Hospitality, led by Mark Scheinberg, who had earlier co-founded and sold his online poker company, said it had also bought out some other third-party investors in Tao Group.
The move comes as MSG Entertainment completes a re-organization plan, which will see it hive off its live entertainment business into a new entity.
As per the plan, which is expected to be formally completed by Thursday, the current company will be renamed Sphere Entertainment Co and will comprise its Las Vegas music arena Sphere and TV unit MSG Networks.
The new company, which will retain the name Madison Square Garden Entertainment Corp, will include venues such as Radio City Music Hall, the Beacon Theatre and the Chicago Theatre along with the entertainment and sports bookings business.
Moelis & Company LLC, Kirkland & Ellis LLP and Deloitte were advisers to Mohari Hospitality. Goldman Sachs & Co (NYSE:GS) LLC and Hughes Hubbard & Reed LLP were advisers to Tao Group.