NEW YORK - TKO Group Holdings, Inc. (NYSE: TKO), a major player in sports and entertainment, has unveiled a share repurchase program worth up to $2 billion and the initiation of a quarterly cash dividend expected to total $75 million. This move is indicative of TKO's robust financial position and its strategy to enhance shareholder value.
In parallel, TKO has entered into a definitive agreement to acquire Professional Bull Riders (PBR), On Location, and IMG from Endeavor Group Holdings, Inc. (NYSE: EDR) in an all-equity deal valued at $3.25 billion. The acquisition is poised to bolster TKO's presence in the premium sports sector, complementing its UFC and WWE operations and offering direct involvement in the growth of partner leagues and events.
Ariel Emanuel, TKO's Executive Chair and CEO, emphasized the company's commitment to a balanced capital allocation strategy. Mark Shapiro, President and COO of TKO, noted that the newly acquired assets would significantly enhance TKO's portfolio and global standing in premium sports.
The transaction, which is subject to regulatory approvals and customary closing conditions, is anticipated to be finalized in the first half of 2025. Upon completion, Endeavor is expected to own approximately 59% of TKO, with existing shareholders retaining the remaining 41%.
TKO's share repurchase program is flexible in terms of timing and volume, dependent on market conditions and other considerations. The program, with no set expiration, is projected to be executed over three to four years and may be adjusted or terminated at any time.
The quarterly dividend is slated to commence on March 31, 2025, with future payments being contingent upon TKO's financial and operational performance, among other factors.
TKO's board of directors, following a unanimous recommendation from a Special Committee of independent directors, has approved the repurchase and dividend programs, which are not contingent on the completion of the PBR, On Location, and IMG acquisition.
A webcast to discuss the transaction and capital return program was scheduled for today, with additional details to be provided during TKO's earnings call on November 6, 2024.
This strategic expansion and capital return program reflect TKO's confidence in its business strategy and its dedication to delivering value to its shareholders, based on a press release statement.
In other recent news, Endeavor Group Holdings, Inc. has secured a $175 million margin loan agreement with various lenders through its subsidiary, January Capital HoldCo, LLC. The loan, secured by a first-priority lien on 6.1 million common units of TKO Operating Company, LLC, and an equal number of shares of Class B common stock of TKO Group Holdings, Inc., is set to mature five years from now. In another development, Endeavor Group Holdings has announced a quarterly cash dividend of approximately $27 million for its Class A common stockholders. This dividend is part of an agreement with Silver Lake until the closure of their merger deal. Meanwhile, despite a 21% decline in the number of deals in the second quarter of 2024, deal volumes have seen a modest 3.7% increase to $769.1 billion, according to data from Dealogic. Notably, Silver Lake's acquisition of Endeavor Group Holdings for $13 billion was among the significant transactions. These are recent developments in the company's financial activities and the broader mergers and acquisitions market.
InvestingPro Insights
To complement the article on TKO Group Holdings' recent announcements, let's take a closer look at Endeavor Group Holdings (NYSE: EDR), the company selling PBR, On Location, and IMG to TKO.
According to InvestingPro data, Endeavor has a market capitalization of $13.66 billion and has shown strong revenue growth, with a 26.23% increase over the last twelve months as of Q2 2024. This growth trend is even more pronounced in the quarterly figures, with a 34.13% revenue increase in Q2 2024. These metrics suggest that Endeavor has been experiencing significant business expansion, which may have contributed to its decision to divest certain assets to TKO.
InvestingPro Tips highlight that Endeavor's stock has had a high return over the last year, with a 62.98% price total return. This performance aligns with the company's strategic moves, including the current deal with TKO. Additionally, the tip indicating that Endeavor operates with a moderate level of debt suggests that the company has maintained a balanced financial approach, which could be further improved by the all-equity nature of the TKO transaction.
It's worth noting that Endeavor is trading near its 52-week high, with its current price at 98.82% of the 52-week high. This strong market position may have provided Endeavor with favorable conditions to negotiate the deal with TKO.
For investors interested in a more comprehensive analysis, InvestingPro offers 8 additional tips for Endeavor Group Holdings, providing a deeper understanding of the company's financial health and market position.
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