Silver Lake Management, the private equity group, is considering making a takeover bid for Endeavor Group Holdings Inc., the talent agency and entertainment company behind World Wrestling Entertainment and Ultimate Fighting Championship.
Silver Lake, which holds a 71% voting stake in Endeavor, said in a statement late Wednesday that it “firmly believes in Endeavor’s business.”
The statement followed Endeavor’s announcement that it’s weighing strategic options for its businesses, which includes its original talent-management business, combat sports like WWE and a variety of other assets including Professional Bull Riders. Silver Lake’s co-chief executive officer, Egon Durban, is chairman of Endeavor, which is led by Hollywood superagent Ari Emanuel.
“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor,” the private equity group said in a statement. “To that end, Silver Lake is currently working toward making a proposal to take Endeavor private.”
The decision to consider a sale or restructuring of some assets reflects Endeavor management’s frustration over the falling price of the company’s shares and those of majority controlled TKO Group Holdings Inc., the owner of Ultimate Fight Championship and WWE.
Endeavor holds a 51% stake in TKO, a business that investors value at almost $14 billion. Yet its own market capitalization has fallen, and now stands at $8.5 billion. Rival Creative Artists Agency was valued at $7 billion in a deal reached in September with French billionaire Francois-Henri Pinault.
Emanuel built his talent agency into a multimedia giant over the last decade, spending billions of dollars on dozens of acquisitions, many of them backed by Silver Lake. He acquired the sports agency IMG, Professional Bull Riders and live events such as the Frieze Art Fair and the Miami Open tennis tournament. His two biggest deals were for UFC and WWE.
But management has struggled to convince investors that the pieces fit together in a valuable way. Endeavor called off its first attempt at an initial public offering in 2019, and revived it only after working out a deal to acquire full control of UFC.
When it acquired WWE last month, Endeavor announced it would spin off the combat sports business into a separate company called TKO Holdings. Emanuel hoped this would to help boost the value of both Endeavor and TKO. That hasn’t worked.
“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,” Emanuel said Wednesday in a statement.
After Wednesday’s twin announcements, shares of Endeavor rose as much as 24% to about $22 in extended trading. But the stock had been down 21% this year before the close of trading and was as high as $35.29 in January 2022.
Shares of TKO, meanwhile, have fallen from a high of $118.04 in August of this year, when it was trading as WWE, to $78.64 at the close Wednesday in New York.
Emanuel has seldom been a seller, and it isn’t clear what he may want to unload. He doesn’t want to give up control of his talent agency, according to people familiar with the matter.
He could shed some noncore assets. Endeavor sold IMG Academy, a training school for young athletes, for $1.25 billion earlier this year.
Endeavor hasn’t set a deadline or definitive timetable for completing its review, and there can be no assurance that this process will result in any particular outcome, according to the statement.
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(Updates with valuations in sixth paragraph.)