Endeavor’s UFC Merging With WWE to Form $21.4 Billion Entertainment Giant

The deal, which values UFC at $12.1 billion and WWE at $9.3 billion, is expected to close in the second half of 2023

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Endeavor Group Holdings and Worldwide Wrestling Entertainment have entered a definitive agreement to create a new $21.4 billion live sports and entertainment company consisting of UFC and WWE.

The deal, which was unanimously approved by Endeavor and WWE’s boards of directors, values UFC at $12.1 billion and WWE at $9.3 billion. It is expected to close in the second half of 2023.

Under the terms of the transaction, existing WWE shareholders will roll all existing equity into a new entity that will be the parent company of UFC and WWE (“NewCo” until it is named at a later date) and intends to list on the New York Stock Exchange under the ticker symbol “TKO”. Upon close, Endeavor will hold a 51% controlling interest in the new company and existing WWE shareholders will hold a 49% interest in the new company.

The transaction represents a contribution price of WWE of approximately $106 per share (before any post-closing dividend). Additionally, UFC and WWE will each contribute cash to the new company so that it holds approximately $150 million. Endeavor intends to sweep all excess cash at UFC, and shareholders of the new company (other than Endeavor) are expected to receive a post-closing dividend.

The deal marks an end to WWE’s status as a family-operated business, which dates back to its founding as the Capitol Wrestling Corporation by McMahon’s father, Vincent J. McMahon, in 1953.

McMahon bought the company from his father in 1982 and transformed pro wrestling’s territorial system into a made-for-television nationwide phenomenon driven by WrestleMania and larger-than-life stars like Hulk Hogan, Roddy Piper and Randy Savage. In the years that followed, champions like Dwayne “The Rock” Johnson, Dave Bautista and John Cena would turn their stardom in WWE into crossover success as movie stars.

In June, McMahon was forced to step down from his position as WWE’s CEO after the Wall Street Journal exposed years worth of hush money payments he made to several women to keep quiet about affairs and sexual misconduct. In January, McMahon returned as a board member and said he would be exploring “strategic alternatives” for the company’s shareholders, including a sale.

The new company will be led by Ari Emanuel (Chief Executive Officer), who will also continue in his role as Chief Executive Officer of Endeavor, Vince McMahon (Executive Chairman of the Board) and Mark Shapiro, who 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 and Nick Khan will serve as President of WWE. The Board of Directors will consist of 11 members who will be appointed at a later date, six of whom will be appointed by Endeavor and five of whom by WWE.

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

On a combined 2022 fiscal year-end basis, UFC and WWE achieved revenue of $2.4 billion and a 10% annual revenue growth rate since 2019. Together, UFC and WWE expect to deliver an estimated $50 million to $100 million in annualized run rate cost synergies by leveraging, among other things, Endeavor’s back office and robust infrastructure. 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.

Following the announcement, WWE shares have fallen approximately 7% on Monday, but are up approximately 23% year to date. Meanwhile, Endeavor shares have fallen 1.5% on Monday but are up 11% year to date.