April 3 (Reuters) – World Wrestling Entertainment Inc ( WWE.N ) will merge with Endeavor Group ( EDR.N )-owned mixed martial arts franchise UFC to form a new, publicly listed entertainment giant valued at about 21 billion dollars, the companies said on Monday.
The deal brings together two of the biggest names in wrestling and entertainment and caps a months-long process to sell WWE overseen by its co-founder and executive chairman Vince McMahon, who returned to the company’s board in January.
“This is a once-in-a-lifetime opportunity to bring together two leading pure sports and entertainment companies,” Endeavor CEO Ari Emanuel said in a presentation to investors, describing the deal as a “transformational step” for Endeavor.
Emanuel said he will leverage Endeavor’s expertise in securing media deals, sponsorships and new forms of distribution to drive growth for the new company, which he will lead as CEO while continuing in his role at Endeavor.
McMahon will retain his role in the new company, which will be majority owned by Endeavor with a 51% stake, while WWE investors will own the rest.
Hollywood powerbroker Emanuel has transformed Endeavor, which has its roots in presenting film and television talent, into a sports and entertainment powerhouse with more than 20 acquisitions. He has invested in bull riding events, fashion shows and the Miami Open and Madrid Open tennis tournaments.
Endeavor said it would use the same scheme it used with the UFC, the world’s largest martial arts organization, improving operational efficiency, negotiating lucrative media deals and striking licensing deals. UFC has seen revenue grow more than one and a half times, and adjusted EBTIDA has doubled since 2017, the year after Endeavor acquired a controlling stake in the company. Endeavor bought out the remaining shareholders in 2021.
[1/2] The Endeavor Group Holdings Inc. logo. (EDR) hangs from the New York Stock Exchange on the morning of its public listing on the NYSE in New York City, U.S., April 29, 2021. REUTERS/Shannon Stapleton/File Photo
The newly formed company will seek to capitalize on consumers’ desire to engage in live experiences — a trend that has revived since the height of the pandemic — and their appetite for sports betting, said Endeavor President Mark Shapiro, who will serve on the same capacity in the new company.
Under the deal, which a source said is being called Project Stunner internally, the UFC and WWE will also put money into the new company, so it holds close to $150 million.
The deal values each WWE share at $106, a 16 percent premium to the company’s Friday close, and gives WWE an enterprise value of $9.3 billion.
WWE shares fell 6% in early trade, while Endeavor rose 0.3%. One analyst said WWE investors may have been disappointed it wasn’t an all-cash transaction.
“Maybe the final structure of it was not in line with their short-term thinking about how it might work,” said John Healy, an analyst at Northcoast Research.
The new company will be listed under the symbol “TKO” on the New York Stock Exchange, the companies said.
In January, WWE said it would explore strategic options, which could include a sale, shortly after McMahon’s return to the company.
McMahon retired last July as CEO and chairman of the company following an investigation into alleged misconduct. Co-CEO Stephanie McMahon, who ran the company alone when her father left, resigned a week after his return in January.
Reporting by Tiyashi Datta in Bengaluru and Dawn Chmielewski in Los Angeles; Editing by Shounak Dasgupta, Shinjini Ganguly, Kirsten Donovan and Tomasz Janowski
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