WWE acquired by Endeavor

July 2023 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2023 Issue

Sports entertainment giant World Wrestling Entertainment (WWE) has been acquired by Endeavor Group Holdings, Inc. in a deal that will see the company merge with Endeavor-owned Ultimate Fighting Championship (UFC).

The transaction, which values UFC at an enterprise value of $12.1bn and WWE at an enterprise value of $9.3bn, represents a contribution price of WWE of approximately $106 per share, before any post-closing dividend.

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.

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. Upon closing of the deal, Endeavor will hold a 51 percent controlling interest in the new company and existing WWE shareholders will hold a 49 percent interest in the new company.

“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” said Ariel Emanuel, chief executive 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.”

“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,” said Vincent K. McMahon, executive chairman of WWE. “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,” he added.

In summer 2022, Mr McMahon retired from his post as WWE’s chief executive and chair following an investigation into alleged misconduct. In January 2023, he returned to the board to begin a strategic review of the company. The review process attracted several all-cash bids, however the company considered the all-stock deal proposed by Endeavor to be more attractive.

Mr Emanuel will act as chief executive of both Endeavor and the new company, according to a statement. Mr McMahon will be executive chairman, while Endeavor president and chief operating officer Mark Shapiro will continue to work in the same roles at the new company. Dana White will remain as president of UFC, and WWE chief executive Nick Khan will stay on as president of the wrestling business. The new company’s board will consist of 11 people, six appointed by Endeavor and five by WWE. Each will include three independent directors.

WWE generated a record $1.3bn in revenue in 2022, of which $1bn came from its media operation. Record revenue is forecast again for this year. The company’s lucrative streaming rights deal with NBCUniversal’s Peacock streaming platform in the US expires in 2026 and its linear TV deal with NBCUniversal and Fox expires in 2024. UFC signed a five-year TV contract with ESPN in 2019 that was extended through 2025. It is possible the newly formed company could pursue a joint streaming rights deal once those agreements expire.

WWE holds more than 200 events annually spanning over 180 countries and claims to have a young, diverse fanbase of 1.2 billion, as well as reaching more than 1 billion households worldwide.

Richard Summerfield