A go-private deal for its majority shareholder gave TKO Group Holdings(NYSE: TKO) a lift on Tuesday. That made the stock something of a standout on a gloomy market -- it closed the day more than 5% higher, against the 0.7% decline of the benchmark S&P 500 index.
TKO's majority owner is being acquired
TKO, whose core assets are World Wrestling Entertainment (WWE) and the United Fighting Championship (UFC), is 51% owned by entertainment conglomerate Endeavor Group Holdings(NYSE: EDR).
Well, at least for the moment. Tuesday morning Endeavor announced that it has agreed to be acquired by private equity firm Silver Lake. The purchase price is $27.50 per share, which is to be paid entirely in cash. That figure represents a 55% premium to Endeavor's closing stock price on Oct. 25, 2023. This was the last trading day before Endeavor formally announced the launch of a review of strategic alternatives for its business.
All told, the enterprise value of the deal amounts to $25 billion, Endeavor said.
It added that a special committee of its independent directors has unanimously approved the buyout. It expects the transaction to close by the end of the first quarter of 2025.
TKO to be left alone?
The deal didn't exactly come as a surprise, but Endeavor (and, by extension, TKO) shareholders were undoubtedly pleased by the rich premium Silver Lake is willing to pay. The private equity firm already has a majority voting stake in Endeavor and has been rumored to have been concocting a buyout deal for months.
Regarding TKO, Endeavor wrote that it "is not party to this transaction and will remain a publicly traded company that will continue to benefit from its connectivity to Endeavor's expertise, relationships, and significant capabilities."
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Eric Volkman has positions in TKO Group Holdings. The Motley Fool recommends TKO Group Holdings. The Motley Fool has a disclosure policy.
