- M&A
- October 26, 2023
- 4 minutes read
PE Firm Silver Lake Considers Endeavor Group Buyout
Silver Lake, a prominent American private equity firm, is considering a go-private deal for Endeavor Group Holdings (NYSE: EDR), an…
Silver Lake, a prominent American private equity firm, is considering a go-private deal for Endeavor Group Holdings (NYSE: EDR), an entertainment giant chaired by Ari Emanuel. Silver Lake is one of Endeavor’s biggest shareholders; it invested north of a billion dollars in Endeavor since 2012 and currently holds 71% of voting power.
Endeavor Group’s shares rose 22% in after-market trading hours on Wednesday following Silver Lake’s announcement. The private equity firm “firmly believes in Endeavor’s business and is not interested in selling its shares in Endeavor to a third party nor in entertaining bids for assets that are a part of Endeavor,” it said.
- Endeavor Group debuted on the public markets in 2021, raising $511mn at a nearly $11bn valuation. Before Silver Lake’s announcement, the entertainment giant’s shares traded nearly 30% below its IPO debut price; it declined 21% since this year’s start.
- Endeavor is an entertainment conglomerate with diverse holdings, including the UFC mixed martial arts promotion company, talent agencies WME and IMG, and Professional Bull Riders, the world’s largest bullriding league.
This April, Endeavor merged UFC with professional wrestling company WWE, taking a 51% stake in the combined company named TKO Group Holdings (NYSE: TKO). In a Wednesday statement announcing the review of “strategic alternatives,” Endeavor said it wouldn’t consider selling its prized stake in TKO Group Holdings, which could discourage Silver Lake from a buyout offer.
“Given the continued dislocation between Endeavor’s public market value and the intrinsic value of Endeavor’s underlying assets, we believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximizing value for our shareholders,” Endeavor chief executive Ari Emanuel said in the statement.
- Silver Lake is one of Endeavor’s biggest backers and contributed greatly to the company’s rise from a Hollywood talent agency into a diversified entertainment conglomerate. The private equity firm provided substantial equity and debt funding to finance Endeavor’s acquisitions, which transformed the firm into an entertainment powerhouse.
- Emanuel was a founding partner of the Endeavor talent agency, which merged with rival William Morris in 2009 to form William Morris Endeavor (WME). In 2013, WME began its acquisition spree by buying rival IMG in a $2.4bn deal largely financed by Silver Lake. It added many more assets over the years, including UFC in 2016, and rebranded as Endeavor Group Holdings in 2017.
- Given Endeavor’s long-standing relationship with Silver Lake, it makes sense that the private equity firm is considering acquiring the entertainment company, taking advantage of lower valuations amid a gloomy market for fast-growing but unprofitable companies like Endeavor.
There’s no guarantee that Silver Lake will make a formal acquisition offer for Endeavor. But, the news cheered Endeavor’s investors, given the share price bump after the announcement.
