A go-private deal for its majority shareholder gave TKO Group Holdings (TKO +0.36%) a lift on Tuesday. That made the stock something of a standout on a gloomy market -- it closed the day more than 5% higher, against the 0.7% decline of the benchmark S&P 500 index.
TKO's majority owner is being acquired
TKO, whose core assets are World Wrestling Entertainment (WWE) and the United Fighting Championship (UFC), is 51% owned by entertainment conglomerate Endeavor Group Holdings (EDR +0.00%).
Well, at least for the moment. Tuesday morning Endeavor announced that it has agreed to be acquired by private equity firm Silver Lake. The purchase price is $27.50 per share, which is to be paid entirely in cash. That figure represents a 55% premium to Endeavor's closing stock price on Oct. 25, 2023. This was the last trading day before Endeavor formally announced the launch of a review of strategic alternatives for its business.
All told, the enterprise value of the deal amounts to $25 billion, Endeavor said.
It added that a special committee of its independent directors has unanimously approved the buyout. It expects the transaction to close by the end of the first quarter of 2025.
NYSE: TKO
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TKO to be left alone?
The deal didn't exactly come as a surprise, but Endeavor (and, by extension, TKO) shareholders were undoubtedly pleased by the rich premium Silver Lake is willing to pay. The private equity firm already has a majority voting stake in Endeavor and has been rumored to have been concocting a buyout deal for months.
Regarding TKO, Endeavor wrote that it "is not party to this transaction and will remain a publicly traded company that will continue to benefit from its connectivity to Endeavor's expertise, relationships, and significant capabilities."
