These days WWE and UFC are under the banner of TKO, which came about after the WWE’s sale to Endeavor. It was quite the rollercoaster ride of rumors and reports during that process, but it eventually went through, though a new lawsuit is taking issue with the process. A suit that was unsealed in the Delaware Court of Chancery on November 22nd alleges that Vince McMahon pushed a “quick sale” of WWE to Endeavor chief Ari Emanuel. The suit also alleges that WWE board members “conjured up a sham sales process” designed to favor Endeavor and “exclude other bidders asking to axe” McMahon (via THR).
The complaint filed by investors alleges that WWE and McMahon disregarded at least two all-cash offers with better terms due to the fact that those deals could’ve pushed McMahon out, and with Endeavor, McMahon could remain in a position of power on top of the company.
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The suit states “If McMahon was found to have breached his duty of loyalty, WWE stockholders could have sought his removal as a director. Such scrutiny appears to have prompted McMahon to seek a ‘quick’ sale of the Company that also allowed him to continue running WWE.”
When McMahon returned to WWE in January, he also revealed that WWE would be reviewing strategic options, and that’s when he brought up a possible sale and that he would be handling those negotiations. Investors in the suit claim that he immediately spoke to Emanuel, who he “knew would allow him to remain at the helm” of what is now known as TKO. Those investors allege that both the process and price point were unfair, saying there were other deals on the table that were better.
The complaint says that included undisclosed companies with cash offers at $95 to $100 and $90 to $97.50 per share. Those companies were reportedly contemplating cashing out WWE stockholders though, and would have barred McMahon from rolling over his shares, signaling his “complete ouster”. The suit alleges that that’s why the board “never bothered to make” counterproposal.
Investors allege that the merger came in at $95.66 per share, which was below the other two all-cash offers. The suit does not reveal who those companies were, but describes them as “major institutions with significant access to capital” that had “compelling reasons to close an acquisition of WWE.” There’s also a note that states one of those companies likely had “significant runway to increase its offer due to the outsized synergies it could generate in a combination with” WWE.
The suit alleges that the $21 billion tag undervalues WWE and that it is “far below the offers” the board could have made had it “made any effort to negotiate in good faith.
