WWE-UFC Merger Challenged by Lawsuit Over Alleged Ignored Higher Bidders

Former WWE shareholders are suing Vince McMahon and other high-ranking executives over the merger with UFC, alleging that McMahon manipulated the sale to favor his friend and excluded other higher bidders, ultimately leading to a significant drop in stock prices.

The UFC and WWE merger is being challenged in court by a group of shareholders after a lawsuit was filed in Delaware. According to court documents filed on Nov. 17, a group of former WWE shareholders represented by the Laborers’ District Council and Contractors’ Pension Fund of Ohio have filed a lawsuit against Vince McMahon and several other high ranking executives from the professional wrestling outfit. The lawsuit alleges that McMahon “used his domineering personality and control over WWE to carry out his own personal agenda at the expense of the Company’s public stockholders” by maneuvering a sale of the promotion to his “longtime friend,” Endeavor CEO Ari Emanuel.

McMahon, along with six other members of the WWE board of directors, orchestrated a deal “designed to favor Endeavor and exclude other bidders seeking to axe McMahon.” McMahon had been ousted as WWE CEO and president amid investigations into sexual abuse and harassment allegations and suddenly returned to WWE using his power as the largest shareholder in the company to regain control and appoint several new members to the board.

The lawsuit alleges that McMahon then reached out to Emanuel about a potential sale of WWE that “would allow him to remain at the helm of the post-transaction company.” The merger between the WWE and UFC was announced, McMahon was confirmed as the executive chairman over the new company called TKO Group Holdings. As part of the deal, Endeavor maintained 51 percent control in the new company with WWE shareholders holding onto the other 49 percent.

The lawsuit alleges that there were multiple other bidders interested in purchasing WWE with all cash offers that were substantially higher than Endeavor. According to documents in the lawsuit, WWE shareholders would receive “consideration equivalent to $88.43 per share” in the sale to Endeavor with two other potential suitors offering prices of $95 to $100 per share and $90 to $97.50 per share. Because those offers would have purchased the whole company thus ending McMahon’s relationship with WWE, the lawsuit alleges that “the board never bothered to make a counterproposal” to the potential buyers. The potential buyers’ names were redacted in the paperwork released by the Delaware Court of Chancery. The merger, which officially closed in September, opened on the stock market trading at $103 per share but those prices have dropped dramatically with the closing price at $79.23 on Monday. TKO Group Holdings has not issued a statement regarding the lawsuit.


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