Endeavor Goes Private

Author: Editors Desk, Todd Spangler Source: Variety:
April 2, 2024 at 14:20

Three years after the Endeavor went public, the company announced it has entered into an agreement to be acquired by private-equity firm Silver Lake.

BEVERLY HILLS, CALIFORNIA - MARCH 12: (L-R) Sarah Staudinger and Ari Emanuel attend the 2023 Vanity Fair Oscar Party Hosted By Radhika Jones at Wallis Annenberg Center for the Performing Arts on March 12, 2023 in Beverly Hills, California. (Photo by Jon Kopaloff/Getty Images for Vanity Fair)

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Endeavor, three years after the sports, entertainment and talent management company went public, announced that it has entered into an agreement to be acquired by private-equity firm Silver Lake.

The deal gives Endeavor an equity value of $13 billion, the companies said. According to the parties, the premium to be paid by Silver Lake — which already owns 71% of the voting shares in Endeavor — represents $4.6 billion more equity value to all Endeavor stockholders. The acquisition is expected to close in the first quarter of 2025.

TKO Group Holdings — formed last year by the merger of WWE and Endeavor-owned UFC — is not part of the Endeavor-Silver Lake transaction and will remain a publicly traded company. TKO “will continue to benefit from its connectivity to Endeavor’s expertise, relationships and significant capabilities,” Endeavor and Silver Lake said.

Silver Lake believes that when consolidating all of TKO’s value into Endeavor, the combined total enterprise value of $25 billion will make this the largest private equity sponsor public-to-private investment transaction in over a decade, and the largest ever in the media and entertainment sector,” the companies said in announcing the pact.

The deal comes just over five months after Endeavor, whose holdings include WME and a majority ownership stake in TKO, in October 2023 announced a “strategic review” of its assets in a bid to find new ways to boost shareholder value — including going private.

Silver Lake’s history with Endeavor dates back to the PE firm’s initial investment in William Morris Endeavor in 2012, continuing through Endeavor’s subsequent acquisition of IMG in 2014 and IPO on the New York Stock Exchange in 2021.

Under the terms of the agreement, Silver Lake will acquire 100% of the outstanding shares of Endeavor does not already own; Silver Lake owns about 37% of the outstanding shares. Endeavor stockholders will receive $27.50 per share in cash, representing a 55% premium to the unaffected share price of $17.72 per share at market close on Oct. 25, 2023, the last full trading day prior to Endeavor’s announcement of its review of strategic alternatives (and a 39% premium over Endeavor’s 30‐day volume-weighted average price prior to that date).

Endeavor CEO Ariel Emanuel (pictured above) said in a statement: “Since 2012, Endeavor’s strategic partnership with Silver Lake and Egon Durban have been central to our evolution into the global sports and entertainment leader we are today. We believe this transaction will maximize value for all of Endeavor’s public stockholders and are excited to continue to unlock and invest in the growth opportunities ahead as a private company.

Egon Durban, co-CEO and managing partner of Silver Lake — and chairman of Endeavor’s board — said his firm’s “unwavering belief” in Emanuel, executive chairman Patrick Whitesell, president-COO Mark Shapiro “and other talented leaders” at Endeavor “has never been stronger.”

This is a very special partnership,” Durban said in a statement. “Together, we have built and grown Endeavor from $350 million in annual revenue when we first invested in 2012 to nearly $6 billion in consolidated revenue today.” As a privately held company, “Endeavor can take advantage of its unique core platform to meet the dynamic forces driving growth in content, sports, and live events with bold vision.”

The transaction is subject to usual closing conditions and required regulatory approvals. No other stockholder approval is required. Upon completion of the transaction, Endeavor’s common stock will no longer be listed on any public market.

Endeavor holdings comprise talent agency WME; IMG’s sports operations and advisory, event management, media production and distribution, and brand licensing business; live event experiences and hospitality through On Location; cultural marketing agency 160over90; OpenBet, a sports data and technology provider; and its 51% controlling interest in TKO Group.

Endeavor reported full-year 2023 revenue of $5.96 billion, up from $5.26 billion in 2022, and adjusted earnings before interest, taxes, depreciation and amortization of $1.21 billion. Net income came in at $557.5 million. Last year, the company paid out $101 million in advisory fees and bonuses related to the WWE merger with UFC as well as the $1.25 billion sale of its IMG Academy business.

In 2023, UFC and WWE both logged record revenue and sponsorship deals. On a pro-forma basis for full-year 2023, the combined operations of UFC and WWE generated revenue of $2.62 billion (up 8%) and net income of $241.5 million (a fourfold increase over $60.1 million the prior year).

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