#Endeavor’s UFC, WWE to Merge; Ari Emanuel to Serve as CEO, Vince McMahon as Executive Chair

Endeavor Group Holdings and sports entertainment powerhouse WWE made things official on Monday, unveiling a definitive agreement to form a new, publicly listed company consisting of two “iconic, complementary” global sports and entertainment brands: UFC and WWE. Endeavor will hold a 51 percent controlling interest in the new company, with existing WWE shareholders owning a 49 percent interest.

The new company will be led by Endeavor CEO Ari Emanuel as CEO, who will also continue in the same role at the remaining Endeavor business, which includes talent agency WME and the likes of IMG. WWE executive chairman and majority shareholder Vince McMahon will serve as executive chairman of the newly created firm, while Mark Shapiro will be president and chief operating officer of both Endeavor and the new company. Dana White will continue in his role as president of UFC, with WWE CEO Nick Khan holding the same president title as White but at WWE. The board of directors of the new firm will consist of 11 members who will be appointed at a later date, with six to be named by Endeavor and five designated by WWE.

Since going public in 2021, Endeavor has looked to build out its sporting events business, mostly through UFC and to a lesser degree via PBR.

The deal is expected to close in the second half of the year. “Together, UFC and WWE will have global reach, impressive scale and omnichannel distribution,” the companies said. “On a combined 2022 fiscal year-end basis, UFC and WWE achieved revenue of $2.4 billion and a 10 percent annual revenue growth rate since 2019.”

The companies are projecting an estimated $50 million-$100 million in annualized cost synergies. Those are targeted by “leveraging Endeavor’s back office and robust infrastructure,” the companies said. “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.”

In that context, Endeavor touted its “success at UFC, including increasing commercial opportunities that have driven more than 2x adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growth since its acquisition in late 2016.”

The new publicly traded company’s ticker symbol will be TKO, which is short for “technical knockout” in combat sports.

“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” said Emanuel. “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.”

Added McMahon: “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.”

He also highlighted: “Together, we will be a $21-plus billion live sports and entertainment powerhouse with a collective fanbase of more than a billion people and an exciting growth opportunity. The new company will be well-positioned to maximize the value of our combined media rights, enhance sponsorship monetization, develop new forms of content and pursue other strategic mergers and acquisitions to further bolster our strong stable of brands.”

McMahoned returned to the sports entertainment company early this year, with WWE unveiling that it would explore a sale. In June of 2022, he had “retired”voluntarily stepped back” from the firm amid a misconduct investigation by its board. The probe focused on allegations that McMahon had sexual relationships with employees at the company and subsequently paid the women millions of dollars in severance packages, along with non-disclosure agreements. The company said in November that the investigation had concluded.

The price tags underlying the UFC-WWE deal will also draw investor attention. It puts an enterprise value of $12.1 billion on UFC and $9.3 billion on WWE, thereby getting into the “$21 billion-plus” territory. The transaction also puts a price of approximately $106 per share on WWE, before any post-closing dividend. UFC and WWE will each contribute cash to the new company so that it holds approximately $150 million. 

The transaction has been unanimously approved by both companies’ boards of directors. The deal is still subject to the satisfaction of customary closing conditions, including regulatory approvals.

Endeavor shares were unchanged in pre-market activity as of 8 a.m. ET, while WWE’s stock was down 6 percent.