WWE And UFC Parent Endeavor To Combine In $21 Billion Mega-Merger

Shares of WWE spiked higher during the premarket session this morning, before eventually moving lower, on a report that the company is going to be entering into a $21 billion tie up with UFC parent company, Endeavor.

The deals values both companies at more than $21 billion, Yahoo reported Monday morning, and the new conglomerate will trade under the ticker TKO. The deal values WWE at $9.3 billion and Endeavor at $12.1 billion. 

Shares had been on a six month rally from near $70 per share to over $90 per share by Friday’s close on news that former Chairman Vince McMahon could be returning. Shares have almost doubled off late 2020 lows near $40 per share. 

WWE majority owner and Executive Chairman Vince McMahon is now expected to assume the executive chairman role of the new company. Endeavor CEO Ari Emanuel will be the company’s CEO.

Emanuel said in a statement: “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.”

McMahon added: “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.”

The companies are predicting synergies of about $50 million to $100 million, mostly from “back office consolidation”, the report says. 

Jefferies analyst Randy Konik said on Monday: “We like the announced transaction to merge UFC with WWE as it creates a separate contained live sport entity that can maximize long-term value and valuation for shareholders and no incremental debt usage is a major positive in terms of transaction structure. In our view, the UFC is in the early stages of its growth trajectory and EDR’s expertise in sports, marketing representation, and live events can take WWE’s fundamentals incrementally higher.”

Part of the reason shares are lethargic Monday morning is that no one is expecting a counter-offer. Steve Cahall of Wells Fargo said: “The premium is solid and if McMahon is on board then it’s done as WWE is a controlled company (and McMahon would need a hefty premium for a cash deal). We would view a deal with Endeavor favorably for WWE.”