Last week, World Wrestling Entertainment, Inc. (WWE) divulged over 500 pages of files pertaining to its ongoing acquisition by Endeavor Group Holdings, Inc. and plan to merge with the United Fighting Championship to form a publicly traded company. Nick Khan, chief executive officer of the WWE, released a letter to stockholders regarding the transaction and the automatic conversion of WWE common stock shares.
It also revealed that WWE executive chairman Vince McMahon owned shares equivalent to approximately 81% of the voting power, and that a condition of the deal with Endeavor was that McMahon would have to remain with the company. McMahon resigned from the WWE last July during investigations into allegations of sexual misconduct, but returned to the company this past January. For now, the publicly traded company is known as New Whale, Inc.; however, it was revealed that the name will be changed at some point in the future.
The WWE drew considerable interest from the time it was put up for sale, with more than 60 counterparties exploring a potential acquisition. Some of these entities included strategic companies, sovereign wealth funds and financial sponsors, and they all explored buying and/or merging with the company. Twenty of the 60 counterparties inked confidentiality agreements pertaining to the transaction process in February and March, including Endeavor. The first proposal from Endeavor was made the day the confidentiality agreement was signed – Feb. 7, 2023 – a merger where it would own 57% of the WWE, a total valuation of $9.3 billion.
Additionally, the WWE received three proposals from entities who wanted to purchase the entire company, with one proposal valuing each share of the company between $95 and $100, but they all required some form of outside financing. Conversely, the Endeavor offer valued shares at $105.98 apiece, and, as a result, the WWE board tried to have two of the three aforementioned entities partner with one another to bid against Endeavor.
Later in March, McMahon and Khan met with Endeavor executives Ari Emanuel and Mark Shapiro where a proposal by the WWE was made giving Endeavor 51% ownership. The deal was ultimately completed when McMahon agreed to remain with the company as its executive chairman. During the weekend of Wrestlemania, the deal was officially finalized when the senior management and board signed off on it after being informed by its financial team that the Endeavor deal was conducive to the time frame.
Several WWE executives will receive compensation upon the completion of the Endeavor deal, including McMahon ($16 million) and Khan ($72 million). The deal will cultivate a $21 billion sports entertainment company with “global reach, impressive scale and omnichannel distribution.”
In fiscal year 2022, WWE and UFC generated a combined $2.4 billion in revenue, a 10% annual revenue growth rate since 2019. Emanuel will serve as the CEO, McMahon will be the executive chairman of the board and Shapiro will be the president and chief operating officer. Khan and Dana White will both remain as presidents of WWE and UFC, respectively. The new property will also hold about $150 million in cash to be contributed by the WWE and UFC, and also presumably be responsible for negotiating new media rights deals for both properties in the near future. The deal is expected to close in the second half of 2023.
