WWE and Endeavor announced Monday that the two public companies would combine in a deal valuing both companies at more than $21 billion. WWE is being valued at $9.3 billion, a more than 33% premium to the company's market cap on Friday, while UFC owner Endeavor is being valued at $12.1 billion.
Endeavor CEO Ari Emanuel will run the combined company as CEO, while WWE majority owner and Executive Chairman Vince McMahon is assuming the executive chairman role. WWE's Nick Khan will be the president of the wrestling brand alongside UFC president Dana White.
“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.”
“Given the incredible work that Ari and Endeavor have done to grow the UFC brand – nearly doubling its revenue over the past seven years – and the immense success we’ve already had in partnering with their team on a number of ventures, I believe that this is without a doubt the best outcome for our shareholders and other stakeholders," McMahon stated.
The company said it sees deal synergies in the range of $50 million to $100 million mostly through back office consolidation. The combined company will trade under the ticker symbol $TKO on the New York Stock Exchange.
"We like the announced transaction to merge UFC with WWE as it creates a separate contained live sport entity that can maximize long-term value and valuation for shareholders and no incremental debt usage is a major positive in terms of transaction structure. In our view, the UFC is in the early stages of its growth trajectory and EDR's expertise in sports, marketing representation, and live events can take WWE's fundamentals incrementally higher," said Jefferies analyst Randy Konik in a client note.
Shares of WWE fell 2% on Monday, while Endeavor was down by 5.8%.
On Sunday evening, veteran analyst Steve Cahall of Wells Fargo said he didn't expect a counter bid for WWE to emerge and considered the proposed deal solid for WWE.
"The premium is solid," Cahall stated, "and if McMahon is on board then it's done as WWE is a controlled company (and McMahon would need a hefty premium for a cash deal). We would view a deal with Endeavor favorably for WWE."
Cahall added that the combined entity would have to impress Wall Street with synergy potentials in order win over investors.
"Key to the market's view will be synergies EDR expects either from cost reduction, or rights revenues by leveraging the combined scale in live sports/entertainment," Cahall wrote. "2025-26 pro-forma NewCo EBITDA expectations will likely be the determinant for synergies and rights deals. If the outlook doesn't impress, there is future risk to WWE shares."