Endeavor and WWE have joined hands to form a new publicly listed company, comprising the mixed martial arts powerhouse – Ultimate Fighting Championship (UFC) – and one of the biggest sports entertainment entities, World Wrestling Entertainment (WWE). The deal is valued at more than $21 billion.
The Birth of $TKO
The newly formed company will be known as $TKO and will trade on the New York Stock Exchange. The deal grants Endeavour shareholders 51% ownership of the new entity, while existing WWE shareholders own 49%. This strategic alliance brings together two giant organizations in combat sports industry, which could be revolutionary.
Leadership Roles
Ari Emanuel, CEO of Endeavor, will serve as the CEO of $TKO. Meanwhile, Vince McMahon, the head of WWE, has been appointed as executive chairman at the new firm. The board of directors for $TKO will consist of 11 members who will be named at a later date, with six designated by Endeavor and five by WWE.
Benefits for Shareholders
The merger is expected to create significant additional value for shareholders by bringing UFC and WWE together. Analysts believe that the combined enterprise will create a separate contained live sport entity that can maximize long-term value for its shareholders. The companies are projecting cost synergies between $50 million to $100 million annually through back-office consolidation.
Bringing Two Diverse Fan Bases Together
The collaboration between UFC and WWE could bring together two very different but diverse fan bases. While UFC represents true mixed martial artists competing in non-scripted fights, WWE provides scripted entertainment with larger-than-life characters. Combining these two could potentially create an entirely new genre the world has never seen before.
McMahon’s Return
This merger marks the end of an era for WWE as a family-owned business. Vince McMahon was forced to retire as CEO of WWE following a hush money and sexual harassment scandal. McMahon reportedly made undisclosed payments of $5 million to former President Donald Trump’s charity. McMahon also paid more than $12 million to four women to cover up allegations of sexual misconduct and infidelity. However, McMahon returned in January as a board member and said that he was exploring “strategic alternatives” for the company shareholders, including a sale.
To Win Over Investors
Shares of WWE fell 4% on the news, while Endeavor rose 7%. However, the combined entity will have to impress Wall Street with synergy potentials to win over investors. The transaction has been unanimously approved by both companies’ boards of directors and is subject to the satisfaction of customary closing conditions, including regulatory approvals.
A New Era in Combat Sports Industry
The newly formed $TKO will be well-positioned to maximize the value of combined media rights, enhance sponsorship monetization, and develop new forms of content. With the merge of UFC and WWE, we could be entering into a new era in combat sports industry where entertainment and competition go hand-in-hand. The deal is expected to close in the second half of this year, paving the way for an exciting future for sports entertainment enthusiasts around the globe.
Image Source: Wikimedia Commons
