WWE to be acquired by Endeavor, merge with UFC in new publicly traded company
Three months after Vince McMahon found his way back to the company in an effort to spearhead a sale, WWE announced a transaction agreement on Monday with Endeavor, owners of the UFC, to buy the iconic wrestling brand.
The news was first broken hours before night two of Sunday’s WrestleMania 39 in Los Angeles by CNBC’s Alex Sherman and made official Monday morning with the SEC as it was finalized Sunday.
There are several regulatory hurdles to clear before the deal can be done, but the plan as first reported is to combine WWE and UFC into a publicly traded spin-off company. Endeavor will remain in place, owning 51% while the other 49% will be owned by WWE shareholders.
The name of the new company is unknown, but will trade under the ticker symbol TKO. If the aforementioned regulatory hurdles are cleared, the all-stock deal will be done in the second half of the year.
From the Hollywood Reporter:
“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” said Ariel Emanuel, CEO of Endeavor. “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.”
WWE’s enterprise value is reported as $9.3 billion with UFC carrying an enterprise value of $12.1 billion, putting the new company at just north of a $21 billion valuation.
From the Hollywood Reporter:
“We see significant operating synergies throughout the ecosystem,” Endeavor CFO Jason Lublin told an investors presentation that was webcast on Monday morning. He pointed to a combined $1 billion cost base, excluding direct operating expenditures, “half of which we believe are addressable.
“Lublin predicted the UFC and WWE merger will secure $50 million to $100 million in annual operating synergies, in part by following the earlier acquisition model for UFC which delivered $70 million in cost synergies and similarly integrating WWE into Endeavor’s global infrastructure.
According to reports, the deal came together quickly and the details were finalized over the past few weeks with everything being put to bed on Sunday.
The corporate structure will be Ari Emanuel, who was in attendance at WrestleMania Sunday, as chief executive of both Endeavor and this new venture. Patrick Whitesell remains as Endeavor executive chairman while Mark Shapiro remains as president of Endeavor and the new company. McMahon will be executive chairman of the new company with Nick Khan as president of WWE and Dana White remaining as president of UFC.
A new 11-person Board to be established this year will include six members from Endeavor and five members from WWE.
From the New York Times:
“Must-watch TV is a rarity these days,” said Mark Shapiro, Endeavor’s president and chief operating officer, who will also have those roles at the new company. “And unicorns like the U.F.C. and W.W.E. will be heavily in demand.”
Some answers, more questions
The impending sale ends an intriguing first quarter of the calendar year that saw McMahon return to the Board with two of his former executives in tow that resulted in several Board members resigning, his daughter Stephanie McMahon departing as co-CEO, and plenty of “palace intrigue” speculation with head of creative and Stephanie’s husband, Paul “Triple H’ Levesque, remaining at WWE.
Throughout the sales process, several companies were linked to buying WWE which included NBCUniversal (owners of USA Network and Peacock) and the Saudi Arabia Public Investment Fund. A rumor shortly after Vince McMahon’s return that had the PIF buying WWE as a done deal caught fire for a night on social media but was debunked in short order.
Wrestlenomics’ Brandon Thurston reported that WWE employees were sent an email announcing the transaction Monday morning and that there will be an all-hands meeting at 4 PM Eastern.
WWE became a publicly traded company on October 19, 1999, selling 11.5 million shares at $17.00/share.
A major part of the WWE financial puzzle are the company’s impending media rights with both NBCUniversal (Raw) and Fox (SmackDown) which are both up in October 2024. The exclusive negotiating window with both entities opened up this weekend with the rights expected to increase substantially — a massive financial benefit for Endeavor. The UFC’s media deal with ESPN is also up in just a few years.
In past earnings calls, Khan has been bullish on WWE’s prospects of a massive increase in revenue due to the presence of streaming providers.
Vince McMahon remaining in power
There was some questions over the past few months that prospective buyers wouldn’t want McMahon to stay around due to the cloud of controversy surrounding his various “hush money” payouts that were uncovered by the Wall Street Journal last summer. McMahon repaid the company $17.4 million for costs related to the investigation last month.
In interviews, Khan said repeatedly that McMahon’s post-sale inclusion, or lack thereof, wouldn’t prevent any sale and that he would be willing to step away if required.
With this deal, that will not be the case.
He and UFC head Dana White have an existing relationship and White has gone on record for how much he appreciates McMahon. The two worked together during the time Brock Lesnar was bouncing between both companies and McMahon and family attended a UFC pay-per-view in Las Vegas that took place on the same day that Money in the Bank was held in the same venue.
