Endeavor Shares Soar on Talk of Silver Lake Bid to Go Private
Endeavor shares surged Thursday on near-record volume as investors piled into shares on Silver Lake’s announcement it is considering making a proposal to take the business private. Endeavor was up nearly 25% to $21.13 in early afternoon trading on the New York Stock Exchange in response to the Silver Lake announcement Wednesday night.
“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor,” the asset manager said in a Wednesday evening press release. “To that end, Silver Lake is currently working toward making a proposal to take Endeavor private. Silver Lake 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.”
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Silver Lake, with $101 billion in assets, is the largest single shareholder in Endeavor and commands the majority of voting power—71%—in the business through a special class of voting-only shares. Since 2012, Silver Lake has been an investor in Endeavor, a conglomerate of entertainment companies that includes talent agency WME Agency and On Location, as well as the sports businesses UFC and WWE through a publicly traded subsidiary, TKO Group Holdings.
Earlier Wednesday Endeavor issued a release saying it is considering “strategic alternatives” for itself, “given the continued dislocation between Endeavor’s public market value and the intrinsic value of Endeavor’s underlying assets,” quoting CEO Ari Emanuel. Both Silver Lake and Endeavor said TKO Group Holdings would be a part of the business no matter what decision is made.
Endeavor held a long-planned IPO in April 2021, selling shares at $24 a piece. After reaching a high of $35 in early 2022, shares of the business have been in decline, closing Wednesday’s trading on the New York Stock Exchange at $17.72, just off its all-time low. Executives at Endeavor have been frustrated by what they believe is Wall Street’s low valuation of the business, which should generate $5.74 billion in revenue this year with earnings of $1.79 a share, according to data compiled by S&P Global Market Intelligence.
When Endeavor bought WWE earlier this year, part of management’s thinking behind spinning it and UFC into a separately traded company was that it would present a cleaner business model for investors to evaluate, as well as shift less favorable liabilities from Endeavor’s balance sheet onto the new business, making both more attractive to value-driven investment managers. Instead of seeing a benefit in the stock market from the moves, however, Endeavor shares have slid 18% since the September creation of TKO Group, and about 30% since striking the deal to buy WWE. Similarly, TKO Group, formed at a value of $105.98 a share, is down 25% since it became public.
Silver Lake owns about 37% of the fully diluted stock in Endeavor, according to its most recent proxy statement. While Silver Lake’s 71% voting power means it single-handedly can approve any going-private offer it makes, securities regulations will require the private equity firm to cash out public shareholders at a reasonable valuation.
(This story has been updated in the headline and first paragraph with news of Endeavor’s stock performance.)
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