WME owner Endeavor to go private again after three-year run as a public company

Endeavor, the owner of Hollywood talent agency WME, said Tuesday that it will be taken private by its largest investor, Silver Lake, three years after the Beverly Hills-based entertainment giant made its stock market debut.

Under the deal, Silver Lake, the private equity firm based in Menlo Park, will acquire all outstanding shares of Endeavor that it does not own. Endeavor stockholders would get $27.50 per share in cash, a 55% premium over the closing price of $17.72 before Endeavor announced its plan last year to consider strategic alternatives. The company said it is being acquired at an equity value of $13 billion.

“We believe this transaction will maximize value for all of Endeavor’s public stockholders and are excited to continue to unlock and invest in the growth opportunities ahead as a private company,” Endeavor Chief Executive Ari Emanuel said in a statement.

Endeavor-backed TKO, the publicly traded venture that owns UFC and WWE, is not party to the transaction, the company said.

Over the years, Endeavor has become increasingly diversified, owning not just WME and UFC but also Professional Bull Riders, live events experiences business On Location and other entertainment-related concerns. Although Endeavor executives were bullish that these different parts of entertainment would form a cohesive and successful business, some investors were skeptical.

Even Emanuel admitted in a discussion at Bloomberg’s Screentime conference last year that “our Endeavor story was a little confusing” for Wall Street.

The company first planned for an initial public offering of stock in 2019 but later pulled it back because of unstable market conditions. Like other entertainment companies, Endeavor was hard hit by the COVID-19 pandemic and laid off hundreds of staff members as many live events and Hollywood productions were shut down or suspended.

In 2021, Endeavor had its IPO, but the company’s stock struggled to deliver the returns that investors wanted.

Endeavor has taken steps to try to boost its stock, including a deal last year to merge its UFC business with World Wrestling Entertainment in a new publicly traded company called TKO.

But Endeavor took a further financial hit from the dual writers’ and actors’ strikes last year; its chief financial officer estimated the strikes cost the company about $25 million in revenue each month.

On Oct. 25, Endeavor said it was exploring its strategic alternatives, suggesting that it was looking for buyers. The stock had dropped below $18 a share, significantly lower than the closing price of $25.20 on its opening day. Shortly after Endeavor made its announcement, Silver Lake disclosed its intention to take the firm private.

The deal for Silver Lake to acquire Endeavor, which is subject to regulatory approval, is expected to close in the first quarter of 2025, the companies said.

“The market was not fairly valuing Endeavor prior to Silver Lake announcing its intention to take the company private,” wrote Brandon Ross, an analyst at LightShed Partners. “I would expect Silver Lake to further unlock value by selling off some non-core pieces in the Endeavor portfolio.”

Egon Durban, co-CEO and managing partner of Silver Lake and chairman of the board of Endeavor, said in a statement that his belief in Endeavor’s leaders “has never been stronger,” noting that Endeavor has grown from $350 million in revenue in 2012 to nearly $6 billion in consolidated revenue today.

Silver Lake first invested in Endeavor back in 2012, when the agency business faced fewer challenges.

Endeavor posted a net loss of $29.3 million in the fourth quarter of 2023, compared with a net loss of $225.7 million during the same period a year earlier.

“Now, Endeavor can take advantage of its unique core platform to meet the dynamic forces driving growth in content, sports, and live events with bold vision,” Durban said.

Endeavor stock closed at $25.79, up about 2%, on Tuesday.