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April 3 (Reuters) – World Wrestling Entertainment Inc. (WWE.N) will cooperate with Endeavor Group’s (EDR.N) Mixed martial arts franchise UFC will form a newly public entertainment powerhouse worth about $21 billion, the companies said Monday.
The deal unites two of the biggest names in wrestling and entertainment and caps a months-long sales process for WWE overseen by its co-founder and executive chairman Vince McMahon, who Returned to the company’s board of directors in January.
“This is a once-in-a-lifetime opportunity to bring together two leading pure-play sports and entertainment companies,” Endeavor CEO Ari Emanuel said in an investor presentation, describing the deal as a “transformative step” for Endeavor.
Emmanuel said he will use Endeavor’s expertise in securing media deals, sponsorships and new distribution formats to drive the new company’s growth, and he will assume the role of CEO while continuing his role at Endeavor.
McMahon will retain his role in the new company, which will be majority-owned 51 percent by Endeavor, while WWE investors will own the remainder.
Hollywood power broker Emanuel has transformed Endeavor, which had its roots in representing film and TV talent, into a sports and entertainment powerhouse through more than 20 acquisitions. He invested in bull riding events, fashion shows and tennis tournaments at the Miami Open and Madrid Open.
Endeavor said it would use the same strategy as the UFC, the world’s largest martial arts organization, to improve operational efficiency, negotiate lucrative media deals and strike licensing deals. The UFC has more than doubled its revenue and doubled its adjusted EBTIDA since 2017, a year after Endeavor took a controlling stake in the company. Endeavor buys out remaining shareholders in 2021.
[1/2] On April 29, 2021, the logo of Endeavor Group Holdings Inc. (EDR) was listed on the New York Stock Exchange on the morning of the listing on the New York Stock Exchange in New York City, USA.REUTERS/Shannon Stapleton/File Photo
Endeavor President Mark Shapiro said the new company will seek to capitalize on consumers’ desire to participate in live experiences — a trend that has resumed since the height of the pandemic — and their interest in sports betting . The new company has the same capabilities.
The UFC and WWE will also provide cash to the new company, so it’s holding close to $150 million, according to a deal that one source says is internally known as Project Stunner.
The agreement values ​​WWE at $106 per share, a 16 percent premium to the company’s closing price on Friday, giving WWE an enterprise value of $9.3 billion.
Shares of WWE fell 6 percent in early trade, while Endeavor rose 0.3 percent. WWE investors may be disappointed that this isn’t a cash deal, one analyst said.
“Maybe the final structure doesn’t fit with their short-term thinking about how it works,” said Northcoast Research analyst John Healy.
The new company will be listed on the New York Stock Exchange under the ticker symbol “TKO,” the companies said.
In January, WWE said it would explore strategic options that could include a sale shortly after McMahon returned to the company.
Last July, McMahon retired as the company’s chief executive and chairman following the investigation. alleged misconduct. Co-CEO Stephanie McMahon, who ran the company on her own after her father left, resigned a week later back in January.
Reporting by Tiyashi Datta in Bengaluru and Dawn Chmielewski in Los Angeles; Editing by Shounak Dasgupta, Shinjini Ganguli, Kirsten Donovan and Tomasz Janowski
Our standards: Thomson Reuters Trust Principles.
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