WWE-endeavor Merger Opens 5 Major Potential Regions

WWE (WWE) and Endeavor (EDR), who just joined forces, could win a few matches in the investing ring.

Bank of America analyst Jessica Reif Erlich told clients on Tuesday about a few opportunities: “Even though it’s hard to figure out exact revenue synergies at this point, there are a few areas with a lot of potentials:

(1) Upcoming media rights renewals at both companies (WWE’s Fox and NBC deals end in ’24, and UFC’s U.S. rights are up for renewal in ’25), as well as the ability to create a new direct-to-consumer offering that combines UFC and WWE content;

(2) more sponsorship and licensing opportunities;

(3) cross-promotional opportunities, such as using UFC athletes at WWE events;

(4) improved event operations at WWE, such as premium hospitality and better ticketing

(5) upside potential from sports betting at WWE which recently sought to receive regulatory approval to legalize betting on match results.

The Deal is Worth More than $21 Billion

WWE and Endeavor said on Monday that they would join forces in a deal worth more than $21 billion for both companies. WWE is worth $9.3 billion, which is more than 33% more than the market cap of the company on Friday. UFC owner Endeavor is worth $12.1 billion.

Ari Emanuel, who is the CEO of Endeavor, will be the CEO of the new company. Vince McMahon, who owns most of WWE and is the executive chairman, will be the executive chairman. Along with UFC president Dana White, WWE’s Nick Khan will be the president of the wrestling brand.

Conor McGregor congratulates UFC , EDR and WWE in the following tweet;

Congrats to the @ufc now worth a cool Proper $12bn. Wow! Endeavor bout to scoop the @WWE now also. Incredible. What a powerhouse!
— Conor McGregor (@TheNotoriousMMA) April 2, 2023

Reif Erlich said, “The strategic rationale for this transaction is crystal clear, as it creates a pure-play sports IP ownership entity with exposure to the fastest growing sub-segment of media and entertainment, live sports, and, in this case, a sports area that has not yet been fully monetized.”

Endeavor said that it sees deal synergies of between $50 million and $100 million, most of which come from consolidating back offices. The new company will trade on the New York Stock Exchange under the symbol $TKO.

In a client note, Jefferies analyst Randy Konik said, “We like the announced transaction to merge UFC and WWE because it creates a separate live sports entity that can maximize long-term value and valuation for shareholders, and the fact that no additional debt will be used is a major positive in terms of transaction structure.”

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