Endeavor, the parent company of OpenBet and IMG Arena, has announced it is seeking strategic alternatives for its future and indicated it could delist and go private.
Merely weeks after completing the merger between the UFC and WWE under the publicly traded title ‘TKO Group Holdings’, Endeavor has initiated a formal process to review alternatives for its future.
Several possibilities could come out of the review, but one result that won’t happen is the sale of TKO, the vehicle through which it owns the WWE and the UFC, the crown in its portfolio of investments.
Other consequences remain on the table, however, including the prospect of delisting from the public markets after CEO Ariel Emanuel described to “dislocation” between value and assets.
The firm believes that its stock price does not reflect the true value of the assets and business it owns and is therefore seeking the possibility of moving away from public investment.
Emanuel commented: “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 directly entered the business of sports betting in 2021 when it acquired OpenBet, a sportsbook platform provider, from Light & Wonder, formerly known as Scientific Games.
The transaction was worth around $1.2bn in cash and saw the group formally enter the sportsbook business after being indirectly involved through its other investments.
Endeavor is also the parent of IMG ARENA, a sports data and technology firm that provides sportsbooks with sports statistics to power their trading operations.
It remains to be seen whether IMG and OpenBet are at risk within the review, but the public markets are positive about this move.
In the hours since the group announced its intentions, Endeavor stock jumped as shareholders face the prospect of a full sale and a large payout and dividend.
Interest in Endeavor has already been lodged as speculation over a full sale swirls. One private equity firm to register interest is Silver Lake Management, which holds 71% voting rights in the group. The firm has stated it is working on a deal to take Endeavor private.
“Silver Lake is committed to strategies that deliver value for all shareholders of Endeavor,” the private equity group said in a statement. “To that end, Silver Lake is currently working toward making a proposal to take Endeavor private.”
