The two companies are merging to form a new company

A public company to combine WWE and UFC: The Endeavor Group acquisition of World Wrestling Entertainment and the WrestleMania event

Just as CNBC scooped yesterday, Ari Emanuel’s Endeavor Group is acquiring World Wrestling Entertainment and will spin out a new publicly traded company that combines it with Ultimate Fighting Championship. The McMahon family have owned and run the company for decades at a cost of $9.3 billion.

“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” said Ariel Emanuel, CEO of Endeavor, in a statement. Emanuel will keep his title as chief executive at the agency but will also become the CEO of a new company.

Ari Emanuel will lead the new business that does not yet have a name. Vince McMahon, executive chairman at WWE, will serve in the same role at the new company. Dana White will continue as president of UFC and Nick Khan will be president at WWE.

In premarket trading, the shares of World Wrestling Entertainment fell while the company’s stock price rose. The companies expect to save $50 million to $100 million in costs once the deal is complete, which is expected to close in the second half of this year.

The new company plans to trade on the New York Stock Exchange under the “TKO” ticker symbol. Its board will have 11 members, with six being appointed by Endeavor and five being appointed by WWE.

McMahon was forced to retire as the CEO after the company was hit with a sexual harassment scandal. Vince McMahon had previously reported expenses of $18.9 million, which was disclosed following his departure. That forced the company to revise its financial statements for 2019, 2020 and 2021.

Both companies expect the agreement to close in late 2023. The result will be sports entertainment powerhouses with loyal audiences for each brand. WWE just wrapped up WrestleMania, its biggest live event spectacle of the year, over two nights at SoFi Stadium. The company claims it reached a combined attendance of 161,892 people in the stadium. The event featured WWE’s top superstars and celebrities like Logan Paul — who is somehow batting a thousand at putting on impressive pro wrestling matches — and Snoop Dogg.

WWE has openly pursued a sale in recent months because the company’s lucrative TV deals with Fox and Comcast are coming up for renewal in the not-too-distant future. Monday Night Raw and Smackdown continue to rank among the highest-rated programs on TV, and the company signed a multiyear deal with Peacock in 2021 — reportedly for $1 billion — that brought WWE’s extensive vault and monthly premium live events to the streaming service.

McMahon said that the company would become a $21 billion live sports and entertainment powerhouse with a billion people.

The new company will aim to maximize the value of combined media rights, enhance sponsorship monetization, develop new forms of content, and pursue other strategic mergers and acquisitions in order to bolster their brands according to the information he provided.

After decades of functioning as a family-run business, the deal between Endeavor and the WWE catapults the business into a new era. McMahon took regional wrestling to a national audience with the likes of WWF stars, including The Rock and Hulk Hogan, when he purchased Capitol Wrestling in 1982. The company, which changed its name to World Wrestling Federation and later World Wrestling Entertainment, hosted its first WrestleMania in 1985.

McMahon spoke to CNBC about the notion that he might not ever make a deal for the business. It’s time to do the right thing. He said that it’s the next evolution of wrestling.

“It makes all the sense in the world for all these synergies that we have to extract all of the value that we can out of the marketplace,” he explained.

The merger of UFC and WWE to create an attractive entertainment platform for women and men in the digital age: A note to the shareholders of Endeavor and WWE

Media industry analysts viewed WWE as an attractive target given its global reach and loyal fanbase, which includes everyone from minors to seniors and a wide range of incomes.

The company is known for its social media prowess. It surpassed 16 billion social video views in the final quarter of last year. It has more than 94 million subscribers on video sharing website YouTube and more than 20 million followers on TikTok. Its female wrestlers comprise five out of the top 15 most followed female athletes in the world, across Facebook, Twitter & Instagram, led by Ronda Rousey with 36.1 million followers.

“We like the assets of UFC and also WWE in a world where linear TV is losing market share to streaming, thus live sport content is in high demand,” wrote Jeffries analyst Randal Konik said in a note to clients.

The boards of both Endeavor and WWE approved the transaction and it is expected to close in the second half of the year. It still needs regulatory approval.

The shares of World Wrestling Entertainment fell 5% at the opening bell, despite a 39% increase in the stock this year. Shares of Endeavor, based in Beverly Hills, California, slipped less than 1%.