UFC parent company Endeavor to merge with WWE to create $21bn entertainment giant

UFC parent company Endeavor Group Holdings Inc will merge with World Wrestling Entertainment Inc to create a new publicly listed entertainment giant worth an estimated $21 billion, the companies announced on Monday.

The deal unites two of the biggest names in wrestling and entertainment and caps a months-long sale process for WWE, overseen by its co-founder and executive chairman Vince McMahon, who returned to the company's board in January.

"This is a once-in-a-lifetime opportunity to bring together two leading pure-play sports and entertainment companies," Endeavor chief executive Ari Emanuel said on an investor call, describing the deal as a "transformational step" for Endeavor.

Emmanuel said he would capitalise on Endeavor's expertise in securing media deals, sponsorships and new forms of distribution to fuel growth at the new company, which he will lead as chief executive officer while continuing in his role at Endeavor.

McMahon will retain his role in the new company, which will be majority owned by Endeavor with a 51 per cent stake, while WWE investors will own the rest.

Hollywood power-broker Emanuel has transformed Endeavor, which has its roots in representing film and television talent, into a sports and entertainment powerhouse with more than 20 acquisitions. He has invested in bull riding events, fashion shows and the Miami Open and Madrid Open tennis competitions.

Endeavor said it would run the same playbook it employed with the UFC, the world’s largest mixed martial arts organisation, improving operating efficiency, negotiating lucrative media deals and striking licensing deals.

The newly created company would seek to capitalise on consumers' desire to participate in live experiences – a trend that has resumed since the height of the pandemic – and on their appetite to bet on sports, said Endeavor President Mark Shapiro, who will serve in the same capacity in the new company.

Under the deal that a source said was internally referred to as Project Stunner, UFC and WWE will also contribute cash to the new company so it holds nearly $150 million.

The agreement values each share of WWE at $106, representing a premium of 16 per cent to the company's Friday closing and gives WWE an enterprise value of $9.3 billion.

Shares of WWE fell 4.5 per cent in trading before the bell, while Endeavor was up 4 per cent.

The new company will be listed under ticker symbol "TKO" on the New York Stock Exchange, the companies said.

In January, WWE said it would explore strategic options that could include a sale, shortly after McMahon's return to the company.

McMahon had retired in July last year as the company's chief executive and chair following an investigation into alleged misconduct. Co-chief executive Stephanie McMahon, who single-handedly managed the mantle when her father exited, resigned a week after he returned in January.

The UFC, which is headed by president Dana White, is due to return to Abu Dhabi for UFC 294 in October. It was last staged in the UAE capital in October last year, when Islam Makhachev defeated Charles Oliveira to become world lightweight champion at UFC 280.

Endeavor took a majority holding in the Ultimate Fighting Championship in 2016, in a $4.2 billion deal, and acquired the remaining stake in the company along with its IPO five years later.