Endeavor, WWE Agree To Merge - To Form $21B+ Live Sports And Entertainment Powerhouse

On Monday, Endeavor Group Holdings, Inc EDR and World Wrestling Entertainment, Inc WWE disclosed a deal to form a new, publicly listed company consisting of two iconic, complementary, global sports and entertainment brands: UFC and WWE.

In March, WWE CEO Nick Khan expressed optimism regarding the company's potential sale, and for legalized betting on WWE matches, despite opposition. He said the company hopes to sell for $18 billion.

The transaction values UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. The transaction represents a contribution price of WWE of approximately $106 per share.

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) will likely receive a post-closing dividend.

Upon close, Endeavor will hold a 51% controlling interest in the new company, and existing WWE shareholders will have a 49% interest in the new company.

The existing WWE shareholders will roll all existing equity into the new entity and intend to list on the NYSE under the ticker symbol "TKO." 

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.

Vincent K. McMahon, Executive Chairman of WWE, said, "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."

Ariel Emanuel, CEO of Endeavor, will lead the new company and continue as CEO of Endeavor. McMahon, Executive Chairman of the Board, and Mark Shapiro will be President and COO of both Endeavor and the new company.

UFC and WWE expect to deliver an estimated $50 million - $100 million in annualized run rate cost synergies. Endeavor also expects significant growth across revenue areas.

In January, WWE shared plans to explore strategic options, including a sale shortly after Vince McMahon's return to the company.

In July 2022, McMahon retired as the company's CEO and chair following an investigation into his alleged misconduct. His daughter, Stephanie McMahon, resigned as the company's co-CEO and chair less than a week after her father returned to the board.

Price Action: WWE shares traded lower by 7.41% at $84.50 premarket on the last check Monday.

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