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Vince McMahon to Sell WWE Shares Through Morgan Stanley

Drew Singer, Tom Metcalf and Kamaron Leach

(Bloomberg) -- Vince McMahon is selling part of his stake in World Wrestling Entertainment Inc. through Morgan Stanley at $38 per share, people familiar with the matter said. Shares fell 8.0% on Wednesday.

The overnight deal priced 2.26 million shares at the midpoint of the $37.75 to $38.25 offering range, the people said. That’s a 2.66% discount to Tuesday’s closing price.

The share sale follows a 40% decline in WWE this year with several strategic alternatives having backfired and amid shutdowns of live events to stop the spread of the coronavirus. McMahon’s XFL football league also canceled the remainder of its season on Friday.

Read more: Vince McMahon Could Be the Biggest Obstacle to WWE’s Rebound

WWE’s chief executive officer is working with an undisclosed bank to provide current liquidity, according to a filing on Tuesday after the market closed. McMahon can elect to settle the deal in cash and retain his full ownership of pledged shares, the filing said.

McMahon has seen the value of his WWE stake fall by about $775 million in 2020, according to calculations by the Bloomberg Billionaires Index. After the sale he still owns about a third of the company, a holding worth about $1 billion as of Tuesday’s close.His sale comes as some billionaires scramble to meet margin calls on their pledged shares. India’s Gautam Adani and his family put up an additional $1.4 billion of shares as collateral on existing debt this month, and wealth managers like UBS Group AG and Credit Suisse Group AG have asked clients to post additional collateral.

McMahon, during the company’s last earnings call, said the pro-wrestling giant was weighing options for its WWE Network streaming service. And “it now looks like a transformative deal is not occurring,” Alan Gould, an analyst at Loop Capital, told clients in a downgrade note to sell from hold. Gould slashed his price target by $13 to a Street-low of $30 per share.

With McMahon at the helm, WWE has rattled investor confidence to its core after ousting two of its top executives and wiping out more than $2 billion of the company’s market value since the beginning of the year.

(Updates with Loop comments, background on McMahon and Wednesday’s trading. A previous update added the offering price.)

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