Endeavor Group Holdings has updated the planned timeline of its IPO until September at the earliest, giving it time to close a $700 million acquisition and post second-quarter results, according to a person familiar with the situation.
The company had previously estimated the offering would happen in the second half of 2019, though some recent press reports indicated a goal of going public in the summer. August, however, is not historically an ideal month to galvanize investor interest, so thus the updated forecast.
After already acquiring the UFC, Professional Bull Riders and streaming technology company NeuLion in recent years, Endeavor is closing in on the pickup of On Location Experiences. That acquisition, for as much as $700 million, would add a high-end hospitality asset to Endeavor’s increasingly diverse portfiolio. On Location is part-owned by the NFL.
After Endeavor Shares Stomped The Broader Market In Debut, Reddit Chatrooms And UFC Fans Ponder Investing
Endeavor will also be showing investors financial results from the quarter ending June 30.
While the company has not yet priced the offering, it is likely to seek to raise $500 million, with a valuation of $7 billion to $8 billion, the source indicated.
An Endeavor rep declined to comment on the IPO plans.
Waiting to stage an IPO is not a risk-free move. For now, the markets have presented favorable conditions, but the climate can certainly change, especially with many macroeconomic factors in flux, among them U.S.-China trade relations and Federal Reserve interest rate policy.
Endeavor has faced criticism by the Writers Guild and other Hollywood factions for its intended effort to exploit investor interest in its business, which the WGA and other critics say is increasingly founded on conflict of interest. At issue is the company’s increasing production capacity, which can mean Endeavor could in some cases be negotiating against itself, in effect. At the urging of the WGA, several thousand writers-creators have exited WME and other major agencies in recent months as the issue has reached a boil.
In the early evening, the WGA issued its statement regarding the Endeavor IPO:
“The Endeavor IPO poses an untenable contradiction. One way the company proposes to maximize shareholder results is through conflicted business practices. This has already led to a rebellion of 1400 WGA-represented writers who have left the WME talent agency. The IPO is offering investors a business saddled with conflicts of interest and risks, from extreme leverage to an unaccountable governance structure to potential legal liability for antitrust violations and fiduciary breaches.”
The WGA clash is among several reasons the IPO is “not for the faint of heart,” in the words of Todd Juenger, an analyst with Bernstein Research. In a report last month, Juenger noted the company’s significant debt levels and also the fact that operationally “most of the underlying earnings are both volatile and unpredictable.”
The Wall Street Journal had the initial report on the IPO outlook.
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