Ari Emanuel baits investors to swim with sharks
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Saba
NEW YORK, April 2 (Reuters Breakingviews) -Endeavor EDR.N boss Ari Emanuel hasn’t stopped moving. After taking his entertainment group public in 2021, then separating out crown-jewel sports asset Ultimate Fighting Championship, he has now sealed a $13 billion take-private transaction. The trouble is, the deal looks like chum for sharp-toothed buyer Silver Lake.
The $27.50 per share all-cash offer, unveiled Tuesday, represents a 55% uplift from Endeavor’s stock price on Oct. 25. That was the day the company behind sports gambling outfit OpenBet and the talent agency representing Matt Damon announced a strategic review. The price might look chunky: Including debt, it comes in at nearly 14 times last year’s EBITDA of $1.2 billion – similar to the multiple that rival group CAA fetched in a transaction involving French billionaire François-Henri Pinault in September.
But look closer, and there’s blood in the water. Endeavor and Silver Lake bill this as the largest private equity-led take-private buyout in over a decade. They get there by adding in the value of Endeavor’s controlling stake in TKO TKO.N, home of the merged UFC and World Wrestling Entertainment, bringing the supposed headline figure to $25 billion.
The deal is likely nowhere near that large. Assuming Silver Lake and management roll over their stakes in Endeavor, Egon Durban’s firm only needs around $6.7 billion to pay out to independent investors, Breakingviews calculates. But Durban and Emanuel are right about one thing: the company’s equity value does not seem to reflect the worth of TKO.
This wrinkle stems from the late-2023 deal that formed TKO by separating and merging the UFC with WWE, leaving behind a grab bag of assets at Endeavor including a talent agency, professional bull-riding league and art fair. Under the confusing arrangement, Endeavor’s share price sagged. Prior to exploring alternatives, the company’s market value was about $8 billion – barely more than the then-roughly $7 billion value of its TKO stake.
Silver Lake and Emanuel can benefit from that aberration. Since it consolidates results from TKO, Endeavor’s profit is set to be much higher this year; the take-private represents a mere 9 times multiple of expected 2024 EBITDA, according to LSEG.
A special committee of directors approved the deal, but Silver Lake – which holds voting control – rebuffed a request for a minority vote, Reuters reported. Such votes have been contentious for the buyout shop in the past, like when Carl Icahn agitated for more money when the firm helped take computer-maker Dell private in 2013. This time, investors are left to swim with the sharks.
Follow @jennifersaba on X
CONTEXT NEWS
Endeavor said on April 2 that it had agreed to be acquired by private equity firm Silver Lake in a deal valuing its equity at $13 billion. Shareholders in the talent and entertainment company will receive $27.50 per share in cash, representing a 55% premium to the company’s unaffected share price at the market close on Oct. 25, before it announced a review of strategic alternatives.
Silver Lake owns an approximately 37% stake in Endeavor.
The transaction will be financed through a combination of new and reinvested equity from Silver Lake and additional capital from investors including Mubadala Investment.
The deal does not affect TKO, the publicly traded wrestling and ultimate fighting company that counts Endeavor as its controlling shareholder.
Graphic: Endeavor's shares are a way off from their high Endeavor's shares are a way off from their high https://reut.rs/4ajfnvl
Editing by Jonathan Guilford and Sharon Lam
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
