A gaggle of former WWE shareholders has filed a class-action lawsuit alleging that the occasions main as much as the merger of WWE and Endeavor’s UFC into TKO Group this yr resulted in a “sham gross sales course of” designed to maintain Vince McMahon in energy and minimizing different bidders.
The go well with, made public Monday in Delaware Chancery Courtroom, asserts breach of fiduciary obligation claims towards the defendants: seven members of the WWE board that embody McMahon and Paul “Triple H” Levesque. It claims the actions of the board led by McMahon orchestrated an eventual deal “designed to favor Endeavor and exclude different bidders in search of [to] axe McMahon.”
Learn the shareholder lawsuit right here.
McMahon, who was compelled out by the board as WWE president and CEO in 2022 amid sexual abuse and harassment allegations an an ensuing investigation, ultimately returned with a newly put in board and introduced a “strategic overview course of (i.e., a sale of the Firm),” a transfer that, based on the go well with, was McMahon “maneuvering to safe his energy and management over the Firm within the face of mounting stockholder discontent and authorities investigations into his unlawful predatory conduct.”
The go well with added: “McMahon instantly approached his long-time buddy and Endeavor CEO Ari Emanuel, whom McMahon knew would permit him to stay on the helm of the post-transaction Firm. … Thereafter, the WWE Board—which was managed by McMahon— conjured up a sham gross sales course of designed to favor Endeavor and exclude different bidders in search of axe McMahon.
The go well with stated WWE started signing confidentiality agreements with potential bidders on February 6, 2023. “The very subsequent day, Endeavor submitted a proposal to mix Endeavor’s Final Preventing Championship (‘UFC’) subsidiary with WWE in a money and inventory transaction the place WWE stockholders would obtain consideration equal to $88.43 per share.”
The go well with claims there have been three different suitors for WWE in addition to Endeavor, two of which submitted increased per-share money presents (all three names have been redacted from the submitting).
“By March 13, 2023, WWE had obtained three further presents to amass your entire Firm: [redacted] submitted a money supply at $95-$100 per share, [redacted] submitted a money supply for $90-$97.50 per share, and [redacted] submitted a money supply at an implied share value of $76.83,” it famous. “However as a result of these presents all contemplated cashing out WWE stockholders (together with McMahon—signaling his full ouster from the Firm and sure the wrestling world), the Board by no means bothered to make a counterproposal to [redacted].”
Finally, the go well with claims, the method led to the all-stock deal made official in September merging WWE and UFC into TKO Sports activities, with Endeavor proudly owning 51% of the corporate and former WWE stockholders proudly owning 49%. “The implied Merger consideration for former WWE stockholders was, on the time, $95.66 per share—which fell under each [redacted] opening all-cash presents,” the go well with claims.
The deal noticed Endeavor CEO Emanuel put in as TKO’s CEO, with McMahon its government chairman. Nick Khan, one other of the lawsuit’s defendants, was named WWE’s president.
TKO Sports activities started buying and selling September 12 on the NYSE.
