The firms announced on Monday that World Wrestling Entertainment Inc (WWE.N) and the mixed martial arts company UFC, held by Endeavor Group (EDR.N), will unite to establish an entirely new, publicly listed media empire with an estimated $21 billion in market valuation.
Vince McMahon, the company’s co-founder and executive chairman, who rejoined the boards in January, supervised the months-long selling process for WWE, which brought together two of the most prominent names in wrestling and entertainment.
“This is a once-in-a-lifetime opportunity to bring together two leading pure-play sports and entertainment companies,” Endeavor CEO Ari Emanuel said in an investor presentation, describing the deal as a “transformational step” for Endeavor.
In order to stimulate development at the new firm, which he’ll manage as chief executive officer despite remaining in his existing job at Endeavor, Emanuel stated that he would take full advantage of Endeavor’s experience in negotiating media partnerships, sponsorships, and new modes of delivery.
McMahon will continue in his position at the new company, which is going to be 51 per cent held by Endeavor and the remaining by shareholders from WWE.
According to those with knowledge of the scenario, WWE, which started a policy analysis in January, drawn numerous interested parties who made all-cash proposals, but the firm favoured a collaboration with Endeavor because an all-stock agreement was more intriguing because of the possible upside in the stock value of the merged group.
On Monday, stocks of WWE fell 2.1 per cent to $89.30, whereas those of Endeavor fell 5.9 per cent to $22.52. Shareholders were shocked by the deal’s unusual all-stock arrangement since they had expected a cash-only deal, according to experts and insiders with knowledge of the situation.
“Maybe the ultimate structure of this was not aligned with their short-term thinking of how it might work,” said John Healy, analyst at Northcoast Research.
With more than 20 acquisitions, Hollywood power broker Emanuel has turned Endeavor, which began off as a talent agency for cinema and television, into an entertainment and sports giant. He has made investments in fashion exhibitions, tennis championships in Miami and Madrid, and bull riding festivals.
Endeavour stated it will adopt the same approach it used with the UFC, the biggest martial arts organisation in the world, in order to boost operational effectiveness, secure rich media contracts, and secure licencing agreements.
Since 2017, a year after Endeavor acquired a controlling interest in the business, the UFC has seen revenue growth by even more than 1.5 times as well as its adjusted EBTIDA double. In 2021, Endeavor took over the remaining shareholders.