- Endeavor to raise around US$1.75bn to increase UFC stake from 50.1%
- Second IPO attempt comes after year in which revenue dropped to US$3.48bn
- Tesla CEO Elon Musk nominated to join company’s board of directors
Endeavor Group Holdings, the parent company of the IMG and WME agencies, is finalising a deal to take full ownership of the Ultimate Fighting Championship (UFC) as it prepares to finally go public.
The Beverly Hills-based sports and entertainment conglomerate previously shelved plans for an initial public offering (IPO) in 2019 amid unfavourable market conditions, but the company this week formally began its second attempt by filing a preliminary prospectus with the US Securities and Exchange Commission (SEC).
Endeavor already owns a 50.1 per cent stake in the UFC but – in a move first reported by Sportico – has now agreed to purchase the remaining shares in the world’s leading mixed martial arts (MMA) promotion, the majority of which are held by investment firms Silver Lake and Kohlberg Kravis Roberts (KKR).
It is not clear how much Endeavor intends to raise by going public, which is set to happen later this year, but its preliminary filing mentions the placeholder figure of US$100 million. Around US$1.75 billion will be generated through a private transaction in order to purchase Endeavor shares for which UFC investors have been offered to exchange ahead of the IPO.
Last month, the New York Post reported that the company believed owning 100 per cent of the UFC, which it originally acquired in 2016 as part of a deal worth more than US$4 billion, will present a more attractive business proposition for potential investors.
At the time of its previous failed IPO, Endeavor had hoped to raise as much as US$620 million from the sale of 19.4 million shares priced between US$30 and US$32 each. However, the company then scaled back its offering to 15 million shares at US$27 apiece, before abandoning the IPO altogether.
For the year ended 31st December 2020, Endeavor posted revenue of US$3.48 billion and a net loss of US$625.3 million. Revenue dropped from US$4.57 billion in 2019 and losses rose from US$530.7 million due to the impact of the coronavirus pandemic.
‘As challenging a year as 2020 was, it underscored the strength, creativity, and resilience of our people who mobilised time and time again in the face of overwhelming odds,’ Endeavor chief executive Ari Emanuel (pictured) wrote in a letter included in this week's filing.
‘We made difficult decisions but worked as a team to find creative solutions and best position the business for the future.’
Following the listing, Emanuel, his long-time business partner Patrick Whitesell and Silver Lake will hold more than 50 per cent of the voting power in Endeavor. Meanwhile it has been announced that Tesla chief executive Elon Musk has been nominated to join the company’s board of directors.
Endeavor shares will be listed on the New York Stock Exchange (NYSE) under the ticker symbol ‘EDR’, with Morgan Stanley, Goldman Sachs, JP Morgan, KKR and Deutsche Bank Securities serving as underwriters for the offering.
‘The power of the Endeavor platform has been on full display as we have brought commercial activity back online, guided our clients through an unprecedented set of events, and fostered innovation of new digital business models that will drive growth well into the future,’ added Emanuel.
‘The events of 2020 reminded us of the enduring value of premium intellectual property and content, while reinforcing the strength of our position within the sports and entertainment ecosystem.’
In addition to the UFC, IMG and WME, Endeavor’s portfolio includes premium hospitality company On Location Experiences, Professional Bull Riders (PBR) and a joint venture with the EuroLeague, while it also has an interest in the fledgling US sports betting market through IMG Arena.
