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Sunday, April 21, 2024
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Silver Lake to Take Endeavor Private, Ending Tough Stock Market Run

  • Private equity giant Silver Lake is set to acquire the remaining shares it didn’t already own.
  • CEO Ari Emanuel frequently has complained about the lack of investor appreciation of the company’s varied assets.

Endeavor, the majority owner of TKO Group Holdings and the parent of assets such as IMG, WME, On Location, and Professional Bull Riders (above), will again become a private entity, ending an often-frustrating run of nearly three years for the company on the New York Stock Exchange.

Completing a strategic review process that began last fall, private equity giant Silver Lake will acquire the remaining shares in Endeavor it didn’t already own, placing an equity value of $13 billion on Endeavor, a figure that rises to $25 billion when including Endeavor’s interest in TKO. Silver Lake already held about 71% of the voting power in Endeavor and had already signaled an unwillingness to sell its interest to a third party, making this latest outcome widely expected.

The effort to become a private company once again, however, stems primarily from a lack of investor appreciation of Endeavor stock on the NYSE. Shares have fallen 6% since the company’s initial public offering in April 2021, a period in which the Dow Jones Industrial Average has risen 15%, and even that overall drop for Endeavor required an 11% run-up in shares so far this year as expectations rose of the Silver Lake acquisition.

To that end, Endeavor CEO Ari Emanuel frequently complained about the lack of full market appreciation for the company’s extensive presence across many facets of sports and entertainment, including media and content development, league operations, athlete representation, sports betting, and major events. 

Now, Emanuel and executives for Silver Lake say the transaction provides an opportunity for the entire scope of those varied elements to be recognized economically.

“This is a very special partnership. Together, we have built and grown Endeavor from $350 million in annual revenue when we first invested in 2012 to nearly $6 billion in consolidated revenue today,” said Egon Durban, Silver Lake co-CEO and managing partner. “Now, Endeavor can take advantage of its unique core platform to meet the dynamic forces driving growth in content, sports, and live events.”

Deal Terms

Endeavor stockholders will receive $27.50 per share, a 55% premium from where the stock stood just before the company’s announcement last fall of its strategic review. A closing is not expected until the first quarter of 2025.

The Silver Lake transaction follows last year’s $7 billion acquisition of Creative Artists Agency by French billionaire François-Henri Pinault. That deal helped influence Endeavor’s thinking, and it further advanced Emanuel’s belief his company was undervalued given the breadth of its assets.

TKO, the parent company of WWE and UFC, is not a direct party to the Silver Lake acquisition and will remain a public entity, but it will continue to benefit from Endeavor’s involvement.

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