Endeavor exploring 'strategic alternatives' for company, but UFC and WWE not for sale  

26/10/2023 00:00

Endeavor Group Holding, the corporation that owns the WME talent agency and other sports properties led by CEO Ari Emanuel, has launched a review to explore strategic alternatives for the company, which could mean a potential sale.

The news was announced on Wednesday alongside a statement from Emanuel.

"Given the continued dislocation between Endeavor's public market value and the intrinsic value of Endeavor's underlying assets, we believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximizing value for our shareholders," Emanuel said.

While it's possible that Endeavor could potentially sell pieces of the company or possibly the entire company, it was noted that there would be no consideration to sell the controlling interest in TKO Group Holdings, which is the merged company combining the UFC and WWE.

After agreeing to a deal to acquire WWE, Endeavor then announced plans to spin off the professional wrestling outfit along with the UFC into a new combined company called TKO Group Holdings. Endeavor maintains a 51-percent controlling interest in TKO, which was valued at over $21 billion following the merger.

TKO launched with stock prices valued at more than $100, but now sits at $78.64 per share.

Emanuel serves as CEO over both companies, with TKO looking at several lucrative broadcast rights deals coming up over the next two years that could increase the company's value. The UFC maintains a broadcast rights deal with ESPN that also includes pay-per-view streaming rights, with that partnership set to expire in 2025.

It's expected that negotiations on the UFC's next broadcast rights deal will begin sometime in 2024.

With TKO on its own now, the WME talent agency produces the largest revenue for Endeavor, but the company also owns several other properties including On Location, a live event and experiences agency, as well as the betting technology company OpenBet, among other properties such as Professional Bull Riders.

Endeavor previously sold off IMG Academy — a sports education business — for $1.2 billion, so it's possible the company could seek similar deals for other assets. Silver Lake — the private equity firm that owns a huge chunk of Endeavor — also floated the idea of taking the company private again after just going public in 2021.

The move comes weeks after French billionaire Francois-Henry Pinault reportedly paid $7 billion for a majority stake in Endeavor's main talent agency rivals at CAA (Creative Artists Agency). Endeavor is currently valued at $7.79 billion, although the company has declined 21 percent in value in 2023.

Endeavor did see an 11-percent increase in stock prices in after-market trading.

As part of the initial statement announcing the news, Endeavor noted that there was no "deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any particular outcome," which means there may not be a sale in the end.