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In a significant move within the sports entertainment industry, Vince McMahon, the former CEO of World Wrestling Entertainment (WWE), is set to liquidate a substantial portion of his holdings in TKO Group Holdings. This move comes after the high-profile merger of WWE and the Ultimate Fighting Championship (UFC), facilitated by Endeavor, the parent company of UFC.
McMahon plans to offload approximately 8.4 million shares of Class A typical stock in TKO Group Holdings. At TKO's latest closing share price, this sale amounts to an estimated value of around $713 million. This transaction, as announced in a recent Securities and Exchange Commission (SEC) filing by TKO, will see McMahon receive all net proceeds.
As per regulatory filings, the stock sale represents 30% of McMahon's 28 million shares in TKO as of August. In a strategic financial move, TKO Group Holdings aims to repurchase about $100 million worth of its Class A common stock from the underwriters involved in McMahon's stock sale.
This repurchase plan underscores TKO’s confidence in its financial trajectory and market position. This stock sale by McMahon, who currently serves as the executive chairman of TKO Group, is noteworthy considering his previous 16.4% economic interest in TKO.
McMahon's decision to step down from his CEO role at WWE in 2022 amidst investigations into alleged misconduct was pivotal in his career. However, he made a comeback in January 2023, taking on the role of executive chairman to oversee the sale of WWE.
TKO Leadership Stock Interest
In a related development, Ariel Emanuel, TKO's CEO and director, and Mark Shapiro, president, COO and director of Endeavor, have expressed interest in purchasing up to $1.0 million in TKO stock.
Other company directors have also shown interest in acquiring shares worth $850,000. Morgan Stanley & Co. and MUFG Securities Americas are set to manage the stock offering as book-running manager and co-manager, respectively.
TKO Group's first public earnings report revealed mixed results for Q3 since its formation. The company witnessed a 32% increase in revenue, reaching $449.1 million, and a 26% rise in adjusted EBITDA to $239.7 million. However, net income experienced a decline, falling to $22 million from the previous year’s $129.7 million.
With the establishment of TKO, Dana White continues as UFC’s CEO, and Lawrence Epstein remains its senior executive VP and COO. Nick Khan, previously WWE’s CEO and now its president, has secured a position on TKO’s board.
The deal also saw Emanuel and Shapiro receiving substantial restricted stock units in TKO Class A common stock, worth $40 million and $6.25 million, respectively. These stocks are set to vest over a period contingent on their continued employment.
Additionally, WWE executives, including Khan, Kevin Dunn, Paul "Triple H" Levesque, and CFO Frank Riddick, received substantial cash payments as part of the TKO deal, highlighting the lucrative nature of this corporate manoeuvre.