TKO Group has announced it will acquire On Location Experiences, Professional Bull Riders, and IMG from its own corporate parent Endeavor (NYSE: EDR) in an all-stock transaction. TKO Group Holdings (NYSE: TKO), which currently owns WWE and UFC, expands its holdings in sports, media, and hospitality with the purchase, coming in at a $3.25 billion price tag. Endeavor’s controlling share in TKO Group will rise from 53 to 59% once the deal is closed.
“PBR, On Location, and IMG are industry-leading assets that meaningfully enhance TKO’s portfolio and strengthen our position in premium sports globally,” says Mark Shapiro, President and COO of TKO. “Within TKO, they will help power the growth of our revenue streams and position us to capture even more upside from some of the most attractive parts of our sports ecosystem: media rights, live events, ticket sales, premium experiences, brand partnerships, and site fees. These assets are already built into our business strategy at TKO and will serve to further enhance our strong track record of execution across UFC and WWE.”
On Location Experiences in particular holds a significant share of the high profile sporting event ticketing and “premium experiences” market. It gained significant control of the ticket inventory for the Super Bowl through its acquisition of PrimeSport in 2018, and charges consumers significant mark-up prices on such event access by locking ticket purchases to the add-on amenities it provides like access to hotel rooms and event hospitality offerings.
On Location includes among its major event clients the Olympic and Paralympic Games, FIFA World Cup, NCAA Final Four, and numerous sports and music festivals. Endeavor acquired a majority stake in On Location with a $660 million deal in 2020.
Entertainment companies with significant investments from Endeavor’s parent Silver Lake Partners include the companies now moving down the corporate ladder to TKO, as well as the Madison Square Garden Company, Sphere Entertainment, Learfield/IMG College, and the Oak View Group. It also has a controlling stake in Australian concert and event promoter TEG – which in turn owns the Ticketek ticketing system – though it has reportedly been looking to sell off that business for more than a year.
Until 2021, Shapiro and Endeavor and TKO Group Executive Chair and CEO Ari Emanuel additionally served on the board of Live Nation Entertainment. They both resigned their board positions amid scrutiny from the Department of Justice over antitrust concerns. The significant overlap between the Silver Lake portfolio and that of Live Nation Entertainment has continued since that point, including accusations that Oak View Group’s Irving Azoff – a onetime Ticketmaster and Live Nation executive – was serving as the company’s “pimp” and “hammer” while OVG colluded with, rather than competed against, LNE.
FURTHER READING | DOJ Alleges Oak View Group Colluded With Live Nation in Lawsuit |
TKO Group Holdings also announced a stock buyback program of up to $2 billion of its Class A common stock and initiating an annual dividend of $300 million.
“Today’s announcements reflect the continued strength of our underlying business and our commitment to deploying capital through a balanced capital allocation strategy, including through our share repurchase program and quarterly cash dividend program,” says Emanuel. “This underscores our continued focus on delivering sustainable long-term value for our shareholders.”
Morgan Stanley & Co. LLC is serving as financial advisor to TKO. Latham & Watkins LLP is serving as legal advisor to Endeavor. Moelis & Company LLC is serving as financial advisor to the special committee and Skadden, Arps, Slate, Meagher & Flom LLP as legal advisor to the special committee.
Latham & Watkins LLP is notably also representing Live Nation Entertainment in its fight against the Department of Justice antitrust lawsuit filed earlier this year.