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Ari Emanuel-led entertainment company Endeavor goes private

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Endeavor, the sports and entertainment company run by Hollywood superagent Ari Emanuel, announced plans to go private on Tuesday, nearly three years after joining the public stock markets.

THE transaction — led by Silver Lake, the investment firm that is Endeavor’s longtime backer — is meant to usher in a new era for Endeavor, whose ambitious growth story has failed to gain traction at Wall Street.

Under the terms of the agreement, Silver Lake will purchase the shares of Endeavor it does not already own for $27.50 per share in cash. That price is 55% higher than Endeavor’s stock price on Oct. 25, the day before the company announced it was exploring transaction options.

The transaction values ​​Endeavor at approximately $8.2 billion. Including its debt, the company is valued at $13 billion, making the acquisition one of the largest by a private equity firm this year.

For more than a decade, Mr. Emanuel and his business partner, Patrick Whitesell, sought to transform what began as a talent agency — with clients like Dwayne Johnson and Ben Affleck — into a new kind of media powerhouse: a organization that not only included top talent in sports, entertainment and fashion, but also content companies to showcase that talent. It was a vision that differed from competitors like Creative Artists Agency, which also brought in outside investors but largely stuck to a traditional agency business.

The company was guided by the unlikely pairing of Mr. Emanuel, satirized by Jeremy Piven on the HBO show “Entourage” as a hyper-aggressive crier, and Egon Durban, the cerebral dealmaker behind some of Silver Lake’s biggest deals.

Silver Lake invested in Endeavor in 2012, with Mr. Durban taking a lead advisory role. A wave of acquisitions followed, including IMG, an agency focused on sports and fashion; Professional riders; New York Fashion Week; and technology for sports betting.

Most notably, Endeavor purchased Ultimate Fighting Championship for $4 billion in 2016, betting on the power of mixed martial arts to attract live entertainment dollars. Last year, Endeavor acquired World Wrestling Entertainment to partner with the UFC in a publicly traded company called TKO Group, hoping to reap even more profits from selling live fight rights.

But some bets didn’t really pan out.

While Endeavor had once hoped to profit from “packaging” – the creation and sale of content that pairs writers with other clients – a conflict with writers’ unions forced it to sell a majority stake in its in-house studio.

And even though Endeavor believed TKO Group would be a powerful draw for Wall Street investors, the company’s shares remain below their initial price. (This company will remain listed on the stock exchange.)

Endeavor executives had also hoped that the sale of a majority stake in Creative Artists Agency to François-Henri Pinault, the French luxury mogul, at a rich valuation of $7 billion would contribute to enhancing the valuation of their own company. But Endeavor shares fell after the deal was announced.

The hope now is that by delisting, Endeavor will be able to continue making ambitious investments without being questioned by public market shareholders. He will continue to have the support of Silver Lake, which effectively doubles the support of Mr. Emanuel, Mr. Whitesell and their team.

“This is a very special partnership,” Mr. Durban of Silver Lake, who is also president of Endeavor, said in a statement. “We are working hard with the Endeavor team and our trusted key investors to create value by accelerating growth at scale.”

Silver Lake is now deeply committed to Endeavor’s success: it already controlled about 70% of Endeavor’s voting rights and has said it is not interested in selling its stake in the company. The deal was nevertheless negotiated with a special committee of independent Endeavor directors on behalf of other shareholders.

Silver Lake knows how to take big companies private, reorganize them and take them public again. This helped Michael S. Dell, the technology mogul, buy out other shareholders of the company that bears his name and take it back public.

Mr Dell’s family office, DFO Management, is helping to finance the transaction, alongside Mubadala, the Abu Dhabi sovereign wealth fund; investment firm Lexington Partners; and the asset management arm of Goldman Sachs.

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