The giant company Endeavor Group Holdings has some uncertainty about its future. Endeavor represents countless people in music, publishing, film, television (including in sports media) and even some leagues (specifically the NBA and NHL in media rights negotiations) and is the majority owner of the UFC and WWE and the sole owner of Professional Bull Riders (PBR).
On Wednesday, Endeavor put out a statement of looking at “strategic alternatives” given the discrepancy between their market valuation and their internal valuations. But they did say that would not involve a sale of WWE/UFC parent TKO Holdings. Here’s that statement, via Joe Flint of The Wall Street Journal (who wrote this up here alongside Jessica Toonkel):
Endeavor Group Holdings, Inc. parent of TKO said Wednesday it is launching the "the initiation of a formal review to evaluate strategic alternatives for the Company." Endeavor said it "will not consider the sale or disposition" of its interest in TKO Group Holdings, Inc.…
— Joe Flint (@JBFlint) October 25, 2023
There’s a notable quote from Endeavor CEO Ari Emanuel (seen at top with UFC president Dana White in July 2017) in the last part of that tweet:
“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.”
That itself is a very vague statement, similar to the “strategic partners” talk Disney CEO Bob Iger triggered around ESPN with a comment on CNBC in July. (To his credit, though, Iger was at least more specific on non-ESPN properties, including ABC.) But as with that ESPN “strategic partner” talk, it seemed likely more on what exactly was being contemplated here would come out with further reporting and comment. And some of that already has emerged in just a few hours.
First off, there are some notable comments from Endeavor president and COO Mark Shapiro. He made those to the Journal in the above piece:
“We believe we are significantly undervalued, and we are exploring all options,” Endeavor Group Holdings President and Chief Operating Officer Mark Shapiro said in an interview.
Asked if the WME talent agency was likely to be sold or spun off, Shapiro said, “no one should assume anything.”
And yes, that’s still not spelling out a lot. But while the initial comments didn’t spell out anything, many commentators pointed to the possibility of a sale of all of the company or further private equity investment in it. And something somewhat along those lines is now publicly being considered. Private equity firm Silver Lake, which holds 71 percent of the voting shares in Endeavor (but not a full 71 percent of the equity thanks to non-voting shares), put out a statement Wednesday that they’re contemplating taking the company private:
“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor. To that end, Silver Lake is currently working toward making a proposal to take Endeavor private. Silver Lake firmly believes in Endeavor’s business and is not interested in selling its shares in Endeavor to a third-party nor in entertaining bids for assets that are a part of Endeavor. Silver Lake is the owner of approximately 71% of the voting power of Endeavor. Our Co-Chief Executive Officer, Egon Durban, and our Managing Director, Stephen Evans, serve as members of the Executive Committee of the Board of Directors of Endeavor. Silver Lake has been a committed investor since 2012 and has made significant investments in Endeavor since then to support its growth.”
Silver Lake is a U.S.-based private equity firm, founded in 1999. It was ranked as the 11th-largest private equity firm in the world by Private Equity International in June. They have a lot of other notable investments (including stakes in Motorola, Expedia Group, Airbnb, and more), and notable sports investments, including stakes in Manchester City, Australia’s A-League soccer league, and Diamond Baseball Holdings (minor league baseball teams).
And it’s certainly significant to hear both that Silver Lake is not looking to sell their stake and that they’re possibly trying to buy the other shareholders out and take the company private. And their reaction here added to what was already positive after-hours trading momentum for Endeavor after the Emmanuel statement:
Silver Lake, which owns ~71% of the voting stake in Endeavor Group Holdings, says it is working on a plan to take the company private; EDR rose 24%+ after hours (Wall Street Journal)https://t.co/UIFfEO29Axhttps://t.co/ZE5EHjSGeY
— Mediagazer (@mediagazer) October 25, 2023
Of course, many talks of spinoffs, investments, and more wind up leading to nothing. And many of those that have fallen short in the past were significantly further advanced than this, including with bankers retained. We’ll see what, if anything, this one leads to.
