Esther Lin, MMA Fighting
Endeavor has entered into an agreement to obtain 100 percent controlling interest over the UFC.
The deal was revealed as part of a 300-page prospectus filed with the Securities and Exchange Commission (SEC) on Wednesday as Endeavor Group Holdings officially moves towards taking the company public.
Here’s the disclosure as part of Endeavor’s massive prospectus ahead of a planned initial public offering (IPO) that will likely take place later this year.
“On February 16, 2021, Endeavor Operating Company entered into a Transaction Agreement with the Other UFC Holders and certain of their affiliates pursuant to which Endeavor Operating Company will directly or indirectly acquire equity interests in UFC Parent (including warrants of UFC Parent or common equity received by warrant holders from the exercise of warrants of UFC Parent) from the Other UFC Holders (or their affiliates) resulting in Endeavor Operating Company directly or indirectly owning 100% of the equity interests of UFC Parent (the “UFC Buyout”).
“We currently own 50.1% of UFC Parent’s common equity and have consolidated UFC Parent’s financial results from the date of the UFC acquisition in 2016.”
As part of the transactional buyout, some of the previous owners of the UFC stock will receive stock in Endeavor Group Holdings, which is the name of the conglomerate that will be going public. The prospectus also states that Endeavor will raise $1.7 billion to buy out the remainder of the UFC. But if the company doesn’t go public, the previous ownership structure will remain.
When Endeavor closed a deal to obtain a controlling interest in the UFC back in 2016 for just over $4 billion, the company partnered with several private equity firms to help raise the cash for the sale. Those private equity companies, including Silver Lake Partners, ended up owning around 40 percent of the UFC as a result.
This new buyout will now give Endeavor 100 percent controlling interest over the UFC, which helps to sweeten the pot as the company prepares to go public.
As part of the prospectus filed on Wednesday, Endeavor also reported $3.478 billion in revenue along with net income losses of $625 million in 2020, largely due to the coronavirus pandemic wiping out a large portion of their businesses. The UFC was a huge benefactor in helping Endeavor earn profits last year after the MMA promotion put on events ahead of any other major sport in the United States, making it a very successful 2020 for the company overall.
Endeavor had previously filed to go public back in 2018, but a volatile stock market – other prominent companies like Peloton took a hit after an IPO as well – and a very public spat with the Writer’s Guild of America had investors squeamish on the long term prospects for the company. (Editor’s note: The Vox Media Union is represented by the Writer’s Guild of America.)
Just recently, Endeavor finally reached a settlement with the Writer’s Guild of America that will once again allow the company’s talent agency to represent writers after a tumultuous two-year standoff.
As part of the prospectus, Endeavor also announced that Elon Musk — best known as the CEO of Tesla — has been nominated to join the board of directors at the company.
“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,” Endeavor CEO Ari Emanuel said in the prospectus filed this week. “We made difficult decisions but worked as a team to find creative solutions and best position the business for the future.
“As the global pandemic unfolded, we developed the protocols necessary to help our businesses safely restart operations, providing a model for other professional sports, events, and programs. UFC and PBR were two of the first sports organizations to responsibly return last spring, and we followed in the summer by hosting the WNBA’s season at IMG Academy. In the fall, we brought New York Fashion Week to life, becoming one of the first major events to resume in New York City.
“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.”