Endeavor aims to raise about $511 million with its initial public offering that will value the parent company of WME and UFC at about $10 billion.
Early Tuesday, Endeavor filed its full prospectus with the Securities and Exchange Commission. The company aims to sell 21.3 million shares priced at $23-$24 per share. Endeavor is also doing a private sale of preferred shares to raise about $1.7 billion in order to buy out the remaining 49% of UFC that it does not already own.
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The company plans to use $835.7 million of the funds for the UFC buyout, coming five years after Endeavor acquired the 50.1% majority stake in the mixed martial arts promoter for $4.4 billion in 2016. Firms taking part in the private placement include China’s Tencent, Elliott Investment Management, Mudabala Investment Co., Capital Research and Management, Third Point, Tako Ventures, Zeke Capital Advisors and Silver Lake Partners.
In its registration statement filed last month, Endeavor reported revenue of $3.5 billion for 2020 and a net loss of $625.3 million. The company previously sought to go public in 2019 but pulled the IPO at the last minute.
Following the IPO, Silver Lake — Endeavor’s longtime private-equity backer — will own 68.4% of the voting shares in the company. Endeavor CEO Ari Emanuel, executive chairman Patrick Whitesell and entities that they control will hold 20.8%. That makes it a “controlled company” along the lines of ViacomCBS or Comcast with a dominant shareholder class. At the $24/share price, Emanuel and Whitesell’s 37.7 million shares would be worth about $904 million.
Post-IPO, new investors in Endeavor would own 0.4%-0.5% of the voting shares (and 5% of outstanding shares on a diluted basis). The company also granted the offering’s underwriters the option to purchase up to an additional 3.195 million Class A shares.
“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,” Emanuel wrote in a letter included with the prospectus. “We believe being a public company will enable us to accelerate this mission and further the vision we set out in 1995 to build a company for where the world was headed. We hope you’ll join us.”
Endeavor — parent company of WME, UFC and other sports and entertainment properties — disclosed two recent acquisitions in the latest filing.
On Jan. 14, 2021, the company agreed to pay $200 million for the “path-to-college” business of Reigning Champs, which comprises companies that offer recruiting and admissions services and related software products to high school student athletes and college athletic departments and admissions officers. In addition, Endeavor on April 1 closed a $60 million deal to buy EDH Tennis, the holding company of FlightScope Services, a data collection, AV production and tracking technology specialist for golf and tennis events. Endeavor paid $35 million upfront for FlightScope, with the remainder to be paid in two installments in 2022 and 2024.
The company said it plans to use the net proceeds from the IPO and the private placements for “working capital and general corporate purposes,” as well as “to fund our current or future joint ventures, investments or acquisitions of complementary businesses or other assets,” including the Reigning Champs acquisition.
Endeavor said it applied to list its Class A common stock on the New York Stock Exchange under the symbol “EDR.”
As previously disclosed, Endeavor reported that 43% of 2019 revenue came from its Events, Experiences and Rights division, which includes IMG Events, IMG Academy, IMG Arena, IMG Media and the On Location high-end hospitality services firm. The Representation unit — which houses WME, IMG, Endeavor Content, IMG Licensing and marketing firm 160 Over 90 — accounted for 36% of 2019 revenue, and Owned Sports Properties, comprising UFC, PBR and Euroleague Basketball, delivered 20% of 2019 revenue.
Endeavor noted that under WME’s agreement with the WGA struck in February, the company is precluded from owning 20% or more of a production company. The deal requires WME to divest its interest in Endeavor Content to that threshold and imposes a similar restriction on Silver Lake.
The company ended 2020 with $1.96 billion in cash and equivalents and $5.93 billion in long-term debt, according to the IPO filing.
As of the end of 2020, Endeavor had about 6,400 employees in 28 countries, including more than 4,300 in the U.S. and four other countries in the Americas.
— Todd Spangler contributed to this report.
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