The Endeavor Group-controlled TKO Group said Thursday that its board of directors has agreed to acquire Professional Bull Riders (PBR), hospitality firm On Location and IMG from Endeavor in an all-stock transaction valued at $3.25 billion, authorized a share repurchase program of up to $2 billion, and the initiation of a quarterly cash dividend program worth $75 million in quarterly distributions.“In addition to complementing TKO’s existing core UFC and WWE businesses, the strategic acquisition of these sports and hospitality assets from Endeavor expands TKO’s operational footprint in the fast-growing premium sports market and enables direct participation in the upside from partner leagues and events,” the company said.After the closing of the deal, Endeavor is expected to own approximately 59 percent of TKO “alongside the other existing TKO shareholders, who will own the remaining 41 percent,” the companies said. “The transaction is also subject to purchase price adjustments to be settled in cash and equity.” The transaction is expected to close in the first half of 2025. On an investor call Thursday, TKO president and COO Mark Shapiro said that the deal is a natural fit for the company.“As we’ve said on many occasions, TKO will be opportunistic, selective, prudent and disciplined when it comes to M&A. Today’s announcement checks all those boxes,” Shapiro said, adding that the company still expects its core-owned sports leagues to dominate its balance sheet. “I want to underscore that TKO, without question, is and will continue to be fueled by UFC and WWE, which we anticipate will clearly represent the vast majority of TKO’s adjusted EBITDA.”He added, however, that investors should not expect any of Endeavor’s other sports assets like OpenBet or the Miami Open to join TKO in the future: “Notably, and let me underscore this, these are the only assets TKO will acquire from Endeavor,” Shapiro said.The company says that it expects to generate $30 million in run-rate synergies in connection with the deal.Ariel Emanuel, executive chair and CEO of TKO, said: “Today’s announcements reflect the continued strength of our underlying business and our commitment to deploying capital through a balanced capital allocation strategy, including through our share repurchase program and quarterly cash dividend program. This underscores our continued focus on delivering sustainable long-term value for our shareholders.”Added TKO’s Shapiro: “PBR, On Location, and IMG are industry-leading assets that meaningfully enhance TKO’s portfolio and strengthen our position in premium sports globally. Within TKO, they will help power the growth of our revenue streams and position us to capture even more upside from some of the most attractive parts of our sports ecosystem: media rights, live events, ticket sales, premium experiences, brand partnerships, and site fees. These assets are already built into our business strategy at TKO and will serve to further enhance our strong track record of execution across UFC and WWE.”In April, the Beverly Hills-based sports and entertainment giant Endeavor — the owner of talent agency WME, IMG, betting data firm OpenBet and marketing agency 160over90 — said it would be acquired by majority shareholder Silver Lake at a valuation of $13 billion.IMG is one of the world’s largest global distributors and producers of sports content, packages and sells media rights and brand partnerships, in addition to providing strategic consultancy, digital services and event management services for more than 200 rights holders. Its clients include the NFL, NHL, English Premier League, the International Olympic Committee, the All England Lawn Tennis & Croquet Club (Wimbledon), UFC, WWE and PBR.“The acquisition of IMG does not include businesses associated with the IMG brand in licensing, models and tennis representation, nor IMG’s full events portfolio,” the companies highlighted. Adam Kelly will lead IMG as president.PBR, described as “the world’s premier bull riding league organizing more than 200 annual live events, welcoming approximately 1.25 million fans, and reaching more than 285 million households in more than 65 territories,” will continue to be led by PBR CEO and commissioner Sean Gleason. On Location will continue to be led by president Paul Caine.As part of the asset purchase agreement, Emanuel and Shapiro are giving up bonuses worth $25 million and $100 million, respectively, provided in the Silver Lake deal given that the transactions were agreed between the two controlled companies.“The existing Shapiro employment agreement and Shapiro A&R employment agreement provide Mr. Shapiro with the opportunity to receive certain asset sale bonuses (the ‘asset sale bonuses’) with a value of up to $100 million in connection with sales or dispositions of certain specified assets of the company or Endeavor Operating Company (each, an ‘asset sale’),” a regulatory filing on Thursday noted. Amendments provide that Shapiro “waives his eligibility to receive the asset sale bonuses. To the extent the transaction is not consummated or the transaction agreement is terminated by its terms, Mr. Shapiro will again be eligible to receive asset sale bonuses with a value of up to $100 million.”An amendment for Emanuel provides that he waives his eligibility to receive a $25 million asset sale bonus.
© 2024 The Hollywood Reporter.