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Endeavor Going Private In Deal Valued At $13 Billion

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Endeavor Group Holdings, parent of talent agency WME and controlling shareholder in combat sports powerhouse TKO Group, is going private.

Private equity firm Silver Lake Capital is leading the privatization, which the company describes Tuesday as the largest in media and entertainment history and the biggest in any sector over the past decade. The equity value of the acquisition is pegged at $13 billion, with the enterprise value nearly double that when the TKO interest is taken into account.

Shareholders will receive $27.50 in cash for each share. The price is a 9% premium over Monday's close and 55% better than the closing price last October 25, which was when Endeavor announced it was considering strategic alternatives.

The move ends a mixed three-year run for Endeavor as a public company. Announced with great anticipation prior to Covid, the effort to take the company public was pulled at the eleventh hour in 2019 before finally coming to pass in the spring of 2021. Shares in the company never broke out to become the value generator executives had sought, though going public did personally enrich CEO Ari Emanuel, executive chairman Patrick Whitesell and other top executives.

Rumors that the company was likely headed for a privatization had been circulating in recent months, especially after TKO's public stock debut last fall.

Under the go-private deal, Silver Lake will acquire 100% of the outstanding shares it does not currently own. The company said the arrangement also includes participation from United Arab Emirates sovereign wealth fund Mubadala; Michael Dell's DFO Management; private equity firm Lexington Partners; and funds managed by Goldman Sachs. Other Wall Street firms are assuming an unspecified amount of debt, and equity controlled by Emanuel, Whitesell, president/COO Mark Shapiro and other execs is also being used to fund the transaction.

Emanuel in a press release said Silver Lake's backing since 2012 has been "central to our evolution." He said the privatization will "maximize value for all of Endeavor's public shareholders," adding that management is "excited to continue to unlock and invest in the growth opportunities ahead as a private company."

Silver Lake invested in William Morris Endeavor in 2012 and the company then went on to make a series of debt-laden acquisitions, stirring industry skepticism about its finances as it grew larger. Over time, however, the diversified portfolio including IMG, the Professional Bull Riders, UFC (100% acquired in 2021) and various sports, tech, fashion and event assets became greater than the sum of its parts and the IPO was successful. Yet explaining to Wall Street how the company's units fit together into a coherent whole, and why investors should ride the inherent ups and downs of the business, ultimately became a complex task.

TKO Group Holdings, the press release noted, is "not party to" the privatization and is expected to remain publicly traded. Shares in Endeavor rose 2% on the news, while TKO gained 5%.

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