The newly formed tag team of WWE ( WWE ) and Endeavor ( EDR ) is set to win a few matches in the investment ring.
In a note to clients on Tuesday, Bank of America analyst Jessica Reif Ehrlich laid out some of the possibilities: “While it is difficult to quantify exact revenue synergies at this stage, there are several areas of significant potential: (1) upcoming media rights renewals at both companies (WWE’s Fox and NBC contracts in ’24 UFC US rights expiring in YE25) as well as the ability to combine UFC and WWE content to create a new direct-to-consumer offering; (2) increased sponsorship and licensing opportunities; (3) cross-promotional opportunities (including the use of UFC athletes for WWE events); (4) enhanced event operations at WWE, including premium hospitality and enhanced ticketing capabilities and (5) enhanced event operations at WWE, including the recently sought-to-acquire upside capability through sports betting at WWE, to legalize betting on match results.”
WWE and Endeavor announced Monday that the two companies will combine in a deal worth more than $21 billion. WWE was valued at $9.3 billion, a 33% premium to the company’s market cap as of Friday, with UFC owner Endeavor valued at $12.1 billion.
Endeavor CEO Ari Emanuel will run the combined company as CEO, while WWE majority owner and executive chairman Vince McMahon will assume the role of executive chairman. WWE’s Nick Khan will head the wrestling brand alongside UFC president Dana White.
“The strategic logic for this transaction is clear, as it creates a pure-play sports IP franchise, and it exposes the fast-growing sub-segment of media and entertainment—live games and, in this case, one more game segment to be fully monetized,” said Reif Ehrlich. He also said.
Endeavor is looking at $50 million to $100 million in contract consolidations, mostly through back office consolidation. The combined company will trade on the New York Stock Exchange under the ticker symbol $TKO.
“We like the announced transaction to combine the UFC with WWE because it creates a standalone live sports company that can increase long-term value and valuation for shareholders and the high leverage is not a big plus given the cash flow structure,” Jefferies analyst Randy said. Koenig said in a client note.
WWE and Endeavor did not return repeated requests by Yahoo Finance for an interview regarding the transaction.
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