Endeavor, WWE $21bn merger
April 3, 2023
By Nik Roseveare
Endeavor Group, the owner of UFC, and World Wrestling Entertainment (WWE) are to form a new publicly listed company consisting of the two global sports and entertainment brands. Upon closing , Endeavor will hold a 51 per cent controlling interest in the new company, at a cost of $9.3 billion (€8.5bn). Existing WWE shareholders will hold 49 per cent.
News of a potential sale emerged in January.
“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” commented Ariel Emanuel, CEO of Endeavor. “For decades, Vince [McMahon] and his team have demonstrated an incredible track record of innovation and shareholder value creation, and we are confident that Endeavor can deliver significant additional value for shareholders by bringing UFC and WWE together.”
“Given the incredible work that Ari and Endeavor have done to grow the UFC brand – nearly doubling its revenue over the past seven years – and the immense success we’ve already had in partnering with their team on a number of ventures, I believe that this is without a doubt the best outcome for our shareholders and other stakeholders,” added Vincent K. McMahon, Executive Chairman of WWE.
McMahon continued: “Together, we will be a $21+ billion live sports and entertainment powerhouse with a collective fanbase of more than a billion people and an exciting growth opportunity. The new company will be well positioned to maximize the value of our combined media rights, enhance sponsorship monetisation, develop new forms of content and pursue other strategic mergers and acquisitions to further bolster our strong stable of brands. I, along with the current WWE management team, look forward to working closely with Ari and the Endeavor and UFC teams to take the businesses to the next level.”
The new company will be led by Emanuel (Chief Executive Officer), who will also continue in his role as Chief Executive Officer of Endeavor, McMahon (Executive Chairman of the Board) and Mark Shapiro, who will be President and Chief Operating Officer of both Endeavor and the new company. Dana White will continue in his role as President of UFC and Nick Khan will serve as President of WWE. The Board of Directors will consist of 11 members who will be appointed at a later date, six of whom will be appointed by Endeavor and five of whom by WWE.
Together, UFC and WWE expect to deliver an estimated $50 million to $100 million in annualised run rate cost synergies by leveraging, among other things, Endeavor’s back office and infrastructure. Endeavor also expects significant growth across revenue areas including domestic and international media rights, ticket sales and yield optimisation, event operations, sponsorship, licensing and premium hospitality.
The transaction values UFC at an enterprise value of $12.1 billion and WWE at an aforementioned enterprise value of $9.3 billion. The transaction represents a contribution price of WWE of approximately $106 per share (before any post-closing dividend). Additionally, UFC and WWE will each contribute cash to the new company so that it holds approximately $150 million. At closing, Endeavor intends to sweep all excess cash at UFC, and shareholders of the new company (other than Endeavor) are expected to receive a post-closing dividend.
Under the terms of the transaction, existing WWE shareholders will roll all existing equity into the new entity that will be the parent company of UFC and WWE (‘NewCo’ until it is named at a later date) and intends to list on the New York Stock Exchange under the ticker symbol ‘TKO’.
The transaction has been unanimously approved by the Executive Committee of the Board of Directors of Endeavor and by the Board of Directors of WWE. The transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals, and is expected to close in the second half of 2023.
Speaking on the deal, Emile El Nems, Vice President-Senior Credit Officer for Moody’s Investors Service, said: “Enhanced scale arising from the merger should result in higher operating leverage and greater long term value creation. The combination of WWE and UFC will create a larger concentration of devoted fan base providing Endeavor the ability to increase its subscriber base, enhance the value of its media rights, achieve operating synergies, and create cross selling opportunities.”
WWE held its annual WrestleMania PLE on April 1st and 2nd at the SoFi Stadium in Inglewood, California. In the main events across both nights, Sami Zayn and Kevin Owens became the new Undisputed WWE Tag Team Champions after defeating The Usos, whilst Roman Reigns continued his reign as Undisputed WWE Universal Champion after pinning Cody Rhodes.