Endeavor has pulled its IPO, one day before it was set to start trading on the stock market, a spokesman for the company confirmed.
“Endeavor will continue to evaluate the timing for the proposed offering as market conditions develop,” the company wrote in a press release.
Endeavor’s decision to delay its long-in-the-works IPO signals they were expecting a weak reaction from Wall Street. The company has a lot of debt on its books since the acquisitions of IMG and UFC in the last few years. Conventional thinking in the investor community has been that Endeavor would need to go public to get out from under that debt. Investor insiders say that Endeavor may have overvalued what it thought the company would trade at when it opened on Friday.
On Thursday morning, there were already signs Endeavor was losing confidence.
The company lowered its expected share price and reduced the volume of shares it’s making available. The entertainment and talent management company lowered the estimates on the share price to $26-$27 a share, down from a previous estimate $30-$32 per share, while reducing the number of shares for sale to 15 million, from 19.4 million.
Endeavor, led by CEO Ari Emanuel and executive chairman Patrick Whitesell, was set to begin trading Friday on the New York Stock Exchange under the ticker EDR.
The news was first reported by The Wall Street Journal.
This is not the first time that the company has scuttled plans for a public offering. Endeavor had planned for its IPO to list this summer. That, however, was pushed in August to accommodate the company’s acquisition of live-events company On Location Experiences LLC for as much as $700 million.
Endeavor is the combination of sports, events, fashion and talent-management IMG and the agency WME. WME purchased IMG in 2014 for $2.3 billion. WME itself was the combination of the legendary William Morris Agency and Endeavor.
The new Endeavor purchased the UFC in 2016. It also owns Miss Universe and the Professional Bull Riders tour. In 2017, Endeavor launched Endeavor Content, which it says has financed and/or sold more than 100 films and TV shows in the time that has followed.
In the company’s 150 plus-page prospectus filed in May, Endeavor reported that it generated $3.61 billion in revenue in 2018, and had a net income of $231.30 million after two years of losses (Endeavor had a net loss in 2016 of $98.32 million followed by a net loss of $173.16 million in 2017).
As of March 31, the company said it had $499.71 million in cash and cash equivalents, as well as $9.89 billion in total assets. Endeavor’s total long-term debt tallies $4.62 billion.
The Writers Guild of America, which has openly opposed Endeavor’s IPO for months, said in a statement on Thursday afternoon that the withdrawal “shows that investors didn’t buy the company’s conflicted business practices.” The WGA has condemned the IPO on the argument that is a conflict of interest for a talent agency to be beholden to both shareholders and the talent their agents represent.