[ad_1]
The $21.4 billion merger of World Wrestling Entertainment Inc. and UFC owner Endeavor Group Holdings Inc. is a well-timed move, says analyst firm Jefferies.
Endeavor
EDR,
said Monday it had agreed to combine with World Wrestling Entertainment
WWE,
to form a new publicly listed company to trade under the symbol TKO, with a combined enterprise value of $21.4 billion. The purchase price for WWE stock will be about $106 a share, a premium over its $91.26-a-share close on Friday.
Reports of the deal surfaced late Sunday, although WWE has reportedly been seeking a buyer for months.
“It’s time!” wrote Jefferies analyst Randal Konik in a note released Monday. “We like the announced transaction to merge UFC with WWE as it creates a separate contained live sport entity that can maximize long-term value and valuation for shareholders, and no incremental debt usage is a major positive in terms of transaction structure,” he said. “In our view, the UFC is in the early stages of its growth trajectory and [Endeavor’s] expertise in sports, marketing representation, and live events can take WWE’s fundamentals incrementally higher.”
Now read: Vince McMahon’s asking price for WWE is $9 billion, report says
Konik noted that linear TV is losing market share to streaming, placing live sports content in high demand. “The upcoming rights expirations for both WWE and UFC present meaningful upside opportunity to the cash flows of both the UFC and WWE in their own rights and will further drive EBITDA [earnings before interest, taxes, depreciation and amortization] margins in each franchise incrementally higher,” he said. Jefferies has a buy rating for Endeavor Group.
Shares of Endeavor fell 7.5% Monday, while WWE shares fell 4.9%. The S&P 500
SPX,
is down 0.2%.
“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” said Endeavor CEO Ariel Emanuel in a statement. Emanuel will be CEO of the combined company, while WWE Executive Chair Vince McMahon will also have a leadership role.
In the statement, McMahon said that the deal creates a “live sports and entertainment powerhouse” with a collective fan base of more than a billion people. “The new company will be well positioned to maximize the value of our combined media rights, enhance sponsorship monetization, develop new forms of content and pursue other strategic mergers and acquisitions to further bolster our strong stable of brands,” he said.
Also read: WWE exploring possibility of legal betting on scripted matches: report
All of the 10 analysts surveyed by FactSet have a buy rating for Endeavor Group Holdings, while six have a buy rating and four have a hold rating for WWE.
[ad_2]
Source link
