Endeavor Group, WWE to form global live sports, entertainment company

Endeavor Group Holdings (EDR) and World Wrestling Entertainment (WWE) announced that they have signed a definitive agreement to form a new, publicly listed company consisting of two complementary, global sports and entertainment brands: 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. Together, UFC and WWE will have global reach, impressive scale and omnichannel distribution. On a combined 2022 fiscal year-end basis, UFC and WWE achieved revenue of $2.4B and a 10% annual revenue growth rate since 2019. The new company will be led by Ariel Emanuel CEO, who will also continue in his role as CEO of Endeavor, McMahon, Executive Chairman of the Board, and Mark Shapiro, who 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. Together, UFC and WWE expect to deliver an estimated $50M to $100M in annualized run rate cost synergies by leveraging, among other things, Endeavor’s back office and robust 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. 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 $12.1B and WWE at an enterprise value of $9.3B. 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 $150M. At closing, Endeavor intends to sweep all excess cash at UFC, and shareholders of the new company 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 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. The transaction is expected to close in the second half of 2023. This marks the conclusion of WWE’s strategic alternatives review process.