Endeavor's UFC, WWE Will Merge To Create a New Sports-Media Heavyweight By SVG Staff Tuesday, April 4, 2023 - 12:36 pm
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Endeavor Group Holdings and WWE have signed a definitive agreement to form a new, publicly listed company consisting of UFC and WWE. Upon close, Endeavor will hold a 51% controlling interest in the new company and existing WWE shareholders will hold a 49% interest in the new company. According to the announcement, on a combined 2022 fiscal year-end basis, UFC and WWE achieved revenue of $2.4 billion and a 10% annual revenue growth rate since 2019.
The new company will be led by Ari Emanuel (left), who will serve as CEO, while WWE's Vince McMahon will serve as Executive Chairman of the Board.
The new company will be led by Ari Emanuel, who will serve as CEO of the new entity and also continue in his role as CEO of Endeavor, while WWE's Vince McMahon will become Executive Chairman of the Board and Mark Shapiro will be President and COO 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.
The deal makes Endeavor, which also owns WME-IMG, one of the largest sports-media companies in the world. The transaction values UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. The transaction is expected to close in the second half of 2023.
This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed, says Emanuel. For decades, Vince 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, says McMahon.
McMahon continues, 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 monetization, 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.
Together, UFC and WWE expect to deliver an estimated $50 million to $100 million in annualized 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 optimization, event operations, sponsorship, licensing and premium hospitality. According to the announcement, Endeavor's success at UFC, including increasing commercial opportunities that have driven more than 2x Adjusted EBITDA growth since its acquisition in late 2016, demonstrates the significant value creation opportunity and upside potential of having UFC and WWE under one roof.
Financial Details 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 listing of NewCo will expand the collective investor base to allow for broad market participation across Endeavor and NewCo.
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.
This marks the successful conclusion of WWE's strategic alternatives review process. WWE embarked on this process to take advantage of the company's unique position in the entertainment ecosystem as well as the inflection point coming with its media rights renewals, both of which were widely recognized in the marketplace through this process.
Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are serving as financial advisors to Endeavor, and Latham & Watkins LLP is serving as legal advisor to Endeavor. The Raine Group is acting as lead financial advisor to WWE. J.P. Morgan and Moelis & Company LLC are also acting as financial advisors to WWE. The Raine Group, J.P. Morgan, and Moelis & Company LLC each rendered fairness opinions to the Board of Directors of WWE. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor to WWE, and Kirkland & Ellis LLP is serving as legal advisor to WWE's controlling stockholder, McMahon.
