Endeavor: WWE-UFC Merger Crystallizes Value of Entertainment Franchises, Combo to Yield

Publish date: 2024-05-29

Endeavor is bringing together two of the world’s biggest combat-sports franchises — UFC and WWE — in a blockbuster merger announced Monday.

It’s a deal in which “one plus one equals three,” said Endeavor president and COO Mark Shapiro, who will serve in the same role for the merged UFC-WWE. The pact, valuing the combined company at roughly $21.4 billion, is anticipated to close in the second half of 2023.

The deal will result in an estimated $50 million to $100 million in annualized run-rate cost synergies, according to Endeavor, including by moving WWE to Endeavor’s back-office infrastructure. Shapiro said Endeavor, when it acquired UFC, realized $70 million in cost savings.

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In addition, the deal to combine UFC with WWE will also benefit Endeavor by helping to trim the debt load that the company has carried since it went public in 2021. Following the close of the UFC-WWE deal, Endeavor will have a debt-to-equity ratio of 2.8X while “NewCo” will be 2.5X levered. The deal “crystallizes value on both sides,” meaning the UFC-WWE merged entity and the Endeavor business ex-UFC, said Shapiro.

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Investors exhibited skepticism of the pact: In midday trading Monday after the deal announcement, Endeavor stock was down more than 7% and WWE shares had dropped 4%.

Endeavor’s WME has repped Vince McMahon and WWE for two decades, and execs at the companies have spit-balled a theoretical combination of UFC and WWE for years. Previously, Shapiro said, “it was just casual conversation” — but once McMahon returned to WWE and announced that he was putting the wrestling entertainment outfit on the block, “shits and giggles became something more serious.”

In 2016, the company inked a deal to buy UFC for $4.1 billion. At the time, “everybody thought we were crazy [and] said we overpaid,” Shapiro said. Now, he noted, UFC is being contributed into the WWE transaction at valuation of $12.1 billion.

“We built UFC using the Endeavor flywheel across a myriad business verticals,” including sponsorships, media rights licensing, and “event operations expertise,” said Shapiro. “That same recipe will be applied to WWE.”

Shapiro also touted WWE’s immense digital footprint, with nearly 100 million YouTube followers and more than 20 million TikTok followers. “WWE social is phenomenal,” he said. The merger will see a “best-in-class merging of social teams and across sponsorships,” Shapiro said, which “allows us to maximize revenue potential.”

Endeavor will own 51% controlling interest in the new UFC-WWE company and existing WWE shareholders will hold 49%. WWE expects to distribute a cash dividend to shareholders once the deal closes later this year. NewCo will be launched with about $150 million in cash on hand, contributed from UFC and WWE.

The new UFC-WWE company — whose name has yet to be determined — will be led by Endeaovor chief Ari Emanuel as CEO. Vince McMahon will be the new company’s executive chairman of the board; Dana White will continue as president of UFC and Nick Khan will serve as president of WWE. The company’s board will comprise 11 members, six appointed by Endeavor and five by WWE.

Cynthia Littleton contributed to this report.

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