UPDATED with clarification, more details: A successful IPO of Endeavor – at $24 a share, the top end of a proposed price range — will leave CEO Ari Emanuel and executive chairman Patrick Whitesell with a controlling interest in at least $900 million worth of stock combined.
That figure and others — including a $10 billion valuation, pricing and details of its initial public offering and a concurrent private placement to gain full control of the UFC mixed-martial arts circuit — were in a prospectus filed with the SEC Tuesday. A fuller picture of ownership stakes and other details will be laid out in a subsequent filing.
Emanuel and Whitesell together will control over 37.6 million fully-converted, diluted shares out of a total of 429.7 million. The IPO values the company at over $10 billion. Silver Lake will be the biggest stakeholder.
The investment firm and the two executives will together hold 89% of the voting control through a special class of stock of the company that Emanuel co-founded in 1995.
Endeavor said it plans to offer 21.3 million shares, priced at $23 to $24 a share. Including a number of restricted shares earmarked for management, the offering is expected to be valued in the range of $500 million. Shares of Endeavor Group Holdings will trade on the New York Stock Exchange under the ticker symbol EDR. Separately, the company has arranged a private placement that will yield $835.7 million for Endeavor to take full control of UFC. An additional $951.5 million would be designated as working capital.
The timing wasn’t set. The parent company of WME, IMG and a range of content assets yanked its previous IPO at the 11th hour in 2019. Market conditions and other factors would have stymied its chances, the company concluded. The IPO market overall has rebounded strongly in the meantime, and Endeavor also resolved a protracted struggle with the Writers Guild of America over packaging.
Endeavor led a group of private investors in a $4 billion acquisition of the UFC in 2016. While the circuit has grown steadily, especially among younger fans, and netted lucrative TV and pay-per-view deals, the transaction added to Endeavor’s debt load.
The filing put the company’s debt at a hefty $5.92 billion on a pro forma basis (as of Dec. 2020 assuming the IPO and concurrent private placement at high end of $24 a share and buyout of UFC were completed). Cash and cash equivalents were $1.96 billion..
Along with the rest of the details in the 244-page filing, Endeavor also mentioned that it has made two more acquisitions. The company bought college athlete preparatory business Reigning Champs for $200 million. It also paid $35 million for FlightScope, a data, production and tracking tech firm focused on golf and tennis events.
Last month, Endeavor formally resumed its IPO quest, filing the initial paperwork but providing few financial details. It disclosed it had added Elon Musk to the board of directors.
The Ari Emanuel-led firm acknowledged suffering a heavy blow in 2020 due to the coronavirus pandemic, posting a net loss of $625.3 million. “As challenging a year as 2020 was, it underscored the strength, creativity, and resilience of our people who mobilized time and time again in the face of overwhelming odds,” Emanuel wrote in a letter included in the filing. “We made difficult decisions but worked as a team to find creative solutions and best position the business for the future.”
With the filing, the company will kick off a roadshow to investors and Emanuel embarks on another chapter in an eventful career that started in the CAA mailroom and led to his founding Endeavor with Tom Strickler. Whitesell joined from CAA several years later. Endeavor merged with William Morris Agency in 2009.
Emanuel, the inspiration for Ari Gold of the HBO series Entourage was most recently the focus of a lengthy profile in the New Yorker published today. It describes the transformation of the agency into a global sports and entertainment conglomerate and a mix of friends and financial backers — from Silver Lake, which helped Endeavor acquire giant marketing and events group IMG in 2013, to Khaldoon Al Mubarak, a partner in Abu Dhabi, who helped it buy a majority stake in UFC in 2016.
(An earlier version of this story said the two executives would own outright shares valued at a combined $900 million. The figure was in a prospectus filed with the SEC Tuesday but it referred to controlling interest, not outright ownership.)
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