Endeavor is upping its stake of UFC ownership to 100-percent of the company ahead of a planned initial public offering, opening up the company to institutional and retail investors.
When Endeavor acquired the UFC from Zuffa LLC for slightly more than $4 billion in 2016, it owned 50.1-percent of the company. The remaining portion was owned by other investment partners. With plans for the conglomerate to go public, Endeavor struck a deal to purchase the remaining portion of the UFC from those other investors.
Endeavor was initially planning on going public in 2019, but scrapped those plans when it appeared the market wouldn’t support what they wanted to get out of a public offering.
The new UFC Buyout plan, which was outlined in Endeavor’s filing with the SEC about going public, was a move to strengthen Endeavor’s bottom line and make the IPO more appealing to investors.
According to the S-1 filing, the UFC combined with Professional Bull Riders (PBR) and Euroleague Basketball accounted for 20-percent of Endeavor’s 2019 revenue.
If the various parts of the deal don’t come together as planned, the UFC’s ownership structure would revert back to its current state, leaving Endeavor with a 50.1-percent ownership stake.
UFC Buyout (as outlined in the S-1 filing)
On February 16, 2021, Endeavor Operating Company entered into a Transaction Agreement (the “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.
Endeavor points to overcoming pandemic challenges as company strength
“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. We made difficult decisions but worked as a team to find creative solutions and best position the business for the future,” Endeavor CEO Ari Emanuel said in the filing.
“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.”
An interesting footnote to Endeavor going public is that Tesla and SpaceX CEO Elon Musk would sit on the board of the company.
UFC officials have yet to comment on the buyout or what it or Endeavor’s IPO would mean for the company.