Silver Lake Exploring Proposal to Take Endeavor Private

Endeavor Group Holdings majority owner Silver Lake is working toward making a proposal to take the company 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,” the private equity firm, which holds approximately 71% of the company’s voting power, said in a statement. “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 emphasized that it is “committed to strategies that deliver value for all shareholders of Endeavor.” The firm has approximately $101 billion in combined assets under management and committed capital and its portfolio companies collectively generate nearly $265 billion of revenue annually.

Endeavor stock, which closed at $17.72 per share at the end of Wednesday’s trading session, surged as much as 26% in after-hours trading after the company said it was launching a formal review to evaluate “strategic alternatives.”

Endeavor, which has a market capitalization of $8.47 billion, has seen shares have fall 35% since it went public in April 2021.

“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,” chief executive officer Ari Emanuel said in a statement.

In an interview with the Wall Street Journal, Endeavor’s president and COO Mark Shapiro said management believes the company is “significantly undervalued” and are “exploring all options.” When asked if the William Morris Endeavor talent agency would be sold or spun off, Shapiro replied: “no one should assume anything.”

As part of the review, Endeavor will not consider the sale or disposition of its interest in TKO Group Holdings, which owns and operates the Ultimate Fighting Championship and World Wrestling Entertainment.

The company, which said it would not comment further on the review until it determines a disclosure is necessary or advisable, has not set a deadline or definitive timetable for its completion and can make no assurance that the process will result in any particular outcome.

The move comes after Emanuel said during Bloomberg’s Screentime conference earlier this month that the William Morris Endeavor owner is a “better business” than rival CAA, which was recently sold to Artémis founder François-Henri Pinault in a deal reportedly valued at $7 billion.

“They got valued at 15 times [revenue] for the agency business. Quint — which is an experiences business, same as my business On Location — just got valued about 15 times [in its September sale to Liberty Media]. I just sold IMG Academy which I got zero value for, for $1.2 billion. I sold my production company for a billion dollars and and then I have a betting business in Open Bet. I’m not getting any credit for any of those things.”

“I actually don’t expect it to be 15 times because that’s the private market. It shouldn’t be one and a half times,” Emanuel added. “Give me six [times revenue for a valuation]. I got kids to feed.”

In addition to WME, Open Bet and On Location, Endeavor’s businesses include sports and modeling agency IMG, marketing agency 160over90 and sports data and technology firm IMG Arena

Last month, the company also closed the merger of TKO Group, which Endeavor holds a 51% controlling interest in. The deal valued UFC at $12.1 billion and WWE at $9.3 billion. TKO Group shares, which trade under the ticker symbol TKO, climbed 3% in after-hours trading on Wednesday.

Endeavor will report its earnings for the third quarter of 2023 on Nov. 8, while TKO Group will report earnings for the quarter on Nov. 7.

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