Endeavor Group Holdings, Inc. (NYSE: EDR) and World Wrestling Entertainment, Inc. (NYSE: WWE) announced that they have signed a definitive agreement to form a new publicly listed company consisting of two iconic complementary, global sports and entertainment brands: UFC and WWE. And upon the 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.
Combined, UFC and WWE will have global reach and omnichannel distribution. And 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.
This 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. And Dana White will continue in his role as President of UFC and Nick Khan will serve as President of WWE. The Board of Directors is going to 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.
Combined UFC and WWE expect to deliver an estimated $50 million to $100 million in annualized run rate cost synergies by utilizing Endeavor’s back office and infrastructure. And 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. Plus 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.
The transaction values UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. And the deal represents a contribution price of WWE of approximately $106 per share (before any post-closing dividend). Plus UFC and WWE will each contribute cash to the new company so that it holds approximately $150 million. At the 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 deal, 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 plans 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 deal has been unanimously approved by the Executive Committee of the Board of Directors of Endeavor and by the Board of Directors of WWE. And the deal is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. The deal is expected to close in the second half of 2023.
This announcement makes the successful conclusion of WWE’s strategic alternatives review process. And 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.
KEY QUOTES:
“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed. 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.”
— Ariel Emanuel, CEO of Endeavor
“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.”
“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.”
— Vincent K. McMahon, Executive Chairman of WWE
