Endeavor is reviewing ‘strategic alternatives’ after WWE/UFC merger results in stock price drop

At the very beginning of 2023, Vince McMahon returned to power in WWE in order to explore “strategic alternatives” that would maximize shareholder value. In other words, Vince was essentially back to sell WWE. Endeavor later purchased WWE and merged it with UFC to form a new publicly traded company named TKO Group Holdings.

Endeavor was hoping to see a spike in its stock price following these deals, but things actually went in the opposite direction. The company is frustrated with the results, so yesterday Endeavor announced it is exploring “strategic alternatives” to maximize shareholder value.

Per Wrestlenomics’ Brandon Thurston, here’s the email Endeavor and TKO CEO Ari Emanuel sent his staff on Wednesday about this process:

“Today, Endeavor announced that it has begun a formal review of strategic alternatives.

No other company has a global portfolio like Endeavor — across sports, entertainment, fashion, live events, and premium experiences. Still, Endeavor believes there is a disconnect between its public market value and the intrinsic value of its underlying assets.

Given that, Endeavor has decided to evaluate strategic alternatives to ensure it is maximizing value for EDR shareholders. As part of this review, Endeavor will not consider the sales or disposition of its interest in TKO.

Endeavor has not set a deadline or definitive timetable for the completion of the process and there’s no guarantee of any specific outcome.

We do not anticipate any changes to your day-to-day, and we will share more information when the need arises.”

For WWE fans, the key part of this email is where Ari says “Endeavor will not consider the sales or disposition of its interest in TKO.” In other words, the company line right now is that Endeavor’s stake in WWE will not be affected.

Endeavor initially went public in 2021, but that might change by the time this situation is resolved. That’s because Endeavor’s largest shareholder, tech giant Silver Lake, will propose taking the company private. Per Deadline, here is the statement Silver Lake issued about this story:

“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor. To that end, Silver Lake is currently working toward making a proposal to take Endeavor private. Silver Lake firmly believes in Endeavor’s business and is not interested in selling its shares in Endeavor to a third-party nor in entertaining bids for assets that are a part of Endeavor.”

For those who want this entire situation summarized in plain English, here is Thurston’s attempt to do so:

“Endeavor has long believed Wall Street undervalues their stock. They thought that was mainly because most of their equity was in UFC, so they separated UFC from Endeavor and merged it with WWE. But Endeavor’s stock price still hasn’t improved since the merger. It’s only gotten worse. Endeavor has only been public since 2021. Silver Lake, a private equity firm that already owns much of Endeavor is going to try to take the company private. Presumably they think it will have more value that way. TKO remains a public company regardless of this. Endeavor owns 51% of TKO regardless. Competing talent agency CAA (which has never been a public company) was recently sold in a private equity transaction, which might be an influence.”

For what it’s worth, this news has resulted in a stock price increase for Endeavor this morning.

This story doesn’t change things for WWE right now, but it’s definitely something to stick a pin in for later.

What do you make of it all, Cagesiders?