Silver Lake Taking Endeavor Private, CEO Cedes Role

Endeavor Group Holdings, Inc. a prominent player in the global sports and entertainment arena, has officially announced a definitive agreement to be acquired by Silver Lake, a leading global technology investment firm, with the aquisition will be executed in partnership with the Endeavor management team and other key anchor investors.

As part of the agreement, Silver Lake will acquire all outstanding shares of Endeavor that it does not yet own, excluding rolled interests.

Transaction Details:

Shareholders of Endeavor will receive USD$27.50 per share in cash, marking a significant 55% premium over the unaffected share price of USD$17.72 from market close on October 25, 2023.

This also represents a 39% premium to Endeavor’s unaffected 30-day volume-weighted average price (VWAP).

The total acquisition reflects an equity valuation of USD$13 billion, with Silver Lake projecting that the combined value of Endeavor and TKO will lead to an enterprise value of USD$25 billion.

This transaction is poised to be the largest public-to-private investment by a private equity sponsor in over a decade and holds the distinction of being the largest ever in the media and entertainment sector.

The premium paid by Silver Lake translates to an additional equity value of USD$4.6 billion for all Endeavor stockholders.

Notably, the premium associated with this transaction significantly surpasses the median premium range of 30% typically observed in take-private deals exceeding USD$10 billion in enterprise value across the technology, media, entertainment, and telecommunications industries in the past five years.

The transaction itself is set to proceed without any financing conditions, with funding being sourced through a combination of equity contributions from Silver Lake, alongside additional capital led by Mubadala Investment Company, DFO Management, LLC, Lexington Partners, and various funds managed by Goldman Sachs Asset Management.

Furthermore, members of the Endeavor management team, including Emanuel, Whitesell, and Shapiro, will roll over some of their equity, complemented by fully committed new debt financing from major financial institutions including Goldman Sachs, JP Morgan, Morgan Stanley, Bank of America, Barclays, Deutsche Bank, and the Royal Bank of Canada.

Following Endeavor’s announcement on October 25 regarding its strategic alternatives review, the company established a Special Committee of independent directors. This committee was tasked with evaluating any proposals emerging from the strategic review.

They reviewed and negotiated the proposed acquisition, ultimately approving and recommending it to Endeavor’s executive committee, where the definitive agreement has since been signed, with majority stockholder consent already obtained.

Commenting on the transaction, Endeavor CEO, Ariel Emanuel, said: “Since 2012, Endeavor’s strategic partnership with Silver Lake and Egon Durban have been central to our evolution into the global sports and entertainment leader we are today.”

“We believe this transaction will maximize value for all of Endeavor’s public stockholders and are excited to continue to unlock and invest in the growth opportunities ahead as a private company,” he said.

Endeavor executive chairman, Patrick Whitesell, added: “With Silver Lake’s continued partnership and support, Endeavor is ideally positioned to capitalize on compelling trends in media and entertainment, where global content spending has reached more than $200 billion per year.”

“In a business where the only constant is change, I know Endeavor will continue to lead the industry forward,” he said.

The transaction is subject to standard closing conditions and necessary regulatory approvals, yet does not require further stockholder approval.

Completion is expected by the end of Q1 2025, after which Endeavor’s common stock will be delisted from public trading.

Additional details regarding the transaction will be revealed in Endeavor’s forthcoming current report on form 8-K, which will accompany this deal.

Staff Changes:

In conjunction with the acquisition, Endeavor’s various agency and representation businesses will now operate under the banner of WME Group.

Ari Emanuel transitions from his role as Endeavor’s chief executive to executive chairman of WME Group, while Mark Shapiro steps up as president and managing partner of the new entity, with both maintaining their affiliations with TKO.

Patrick Whitesell, the former executive chairman of Endeavor, has been appointed as chief executive and founder of a new partnership venture with Silver Lake, aimed at investing in and expanding properties and intellectual properties across sports, media, and entertainment. Notably, Whitesell is also set to acquire the WME Football talent agency.

Advisors:

In terms of advisory roles, BDT & MSD Partners acted as the primary financial advisor for Silver Lake, while other leading financial advisors involved included Goldman Sachs, JP Morgan, and Morgan Stanley, among others, while KKR Capital Markets served as a global financing advisor.

Legal representation included Simpson Thacher & Bartlett LLP and Kirkland & Ellis LLP for Silver Lake, while Endeavor was advised by Latham & Watkins LLP.

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