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Tuesday, April 23, 2024
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Endeavor Looks At Strategic Options For Company Amid Lagging Stock

  • TKO majority owner, IMG parent looks at potential privatization.
  • Company has had a rocky experience as a public company since 2021 IPO.
Kyle Terada-USA TODAY Sports

Endeavor Group Holdings could again become a private company in the wake of a long-lagging stock, a move that could ultimately render seismic impacts across the sports and entertainment industries.

The majority owner of TKO Group Holdings and parent of assets such as IMG, WME, and On Location said it has initiated a formal review to “evaluate strategic alternatives for the company.” The move arrives in the wake of a long-suffering stock for Endeavor, with shares down more than 16% this year on the New York Stock Exchange, and down nearly 36% since the company’s high-profile initial public offering in 2021.

That lack of stock appreciation — despite moves such as the formation of TKO out of the landmark UFC-WWE merger and the marked elevation of On Location’s business with key NFL and Olympics assets — has long frustrated Endeavor executives, both privately and publicly.

“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,” said Ari Emanuel, Endeavor CEO.

Silver Lake Support

Private equity giant Silver Lake, which controls about 71% of the voting power in Endeavor, said it is “currently working toward making a proposal to take Endeavor private,” but added it is not entertaining bids from outside parties.

“Silver Lake firmly believes in Endeavor’s business and is not interested in selling its shares in Endeavor to a third party,” the firm said.

Endeavor said the review process is operating without a deadline and without “assurances this process will result in any particular outcome,” though it did rule out the sale of any interest in TKO. Still, news of Endeavor’s review sent shares up more than 24% in after-hours trading, surpassing $22 per share.

The strategic review for Endeavor closely follows the $7 billion acquisition of Creative Artists Agency by French billionaire Francois-Henri Pinault.

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