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A group of former WWE shareholders have filed a class action lawsuit alleging that events leading up to WWE and Endeavor’s UFC merger to form TKO Group this year resulted in a “sham sales process” designed to keep Vince McMahon from the To maintain power and minimize other bidders.
The lawsuit, unsealed Monday in Delaware Chancery Court, asserts claims of breach of fiduciary duty against the defendants: seven members of WWE’s board of directors, including McMahon and Paul “Triple H” Levesque. It is alleged that the McMahon-led board’s actions ultimately resulted in a deal “designed to favor Endeavor and exclude other bidders.” [to] Ax McMahon.”
Read the shareholder lawsuit here.
McMahon, who was ousted as WWE president and CEO in 2022 due to sexual abuse and harassment allegations and a subsequent investigation by the board, eventually returned with a newly installed board and announced a “strategic review process” (i.e. a sale of the company). , a move that McMahon made, according to the lawsuit, “to secure his power and control over the company in the face of increasing shareholder discontent and government investigations into his illegal predatory behavior.”
The lawsuit added: “McMahon immediately turned to his long-time friend and Endeavor CEO Ari Emanuel, who McMahon knew would allow him to remain at the helm of the company following the transaction.”…Afterwards, the WWE- board – which was controlled by McMahon – created a sham sale process designed to favor Endeavor and exclude other bidders who wanted to poach McMahon.
The lawsuit states that WWE began signing confidentiality agreements with potential bidders on February 6, 2023. “The very next day, Endeavor submitted a proposal to combine Endeavor’s Ultimate Fighting Championship (“UFC”) subsidiary with WWE in a cash and stock transaction involving WWE shareholders.” received dollars per share.”
The lawsuit alleges that there are three other suitors for WWE in addition to Endeavor, two of which made higher cash per share offers (all three names were omitted from the filing).
“As of March 13, 2023, WWE had received three additional offers to acquire the entire company: [redacted] made a cash offer of $95 to $100 per share, [redacted] made a cash offer for $90 to $97.50 per share and [redacted] has made a cash offer at an implied share price of $76.83,” it said. “But since these offers all involved paying out WWE shareholders (including McMahon – signaling his complete exit from the company and likely the wrestling world), the board never bothered to make a counter-proposal to them [redacted].”
Ultimately, the lawsuit says, the process led to the all-stock deal, made official in September, in which WWE and UFC merged to form TKO Sports, with Endeavor owning 51% of the company and former WWE shareholders owning 49% . “The implied merger consideration for former WWE shareholders at that time was $95.66 per share – which was less than both [redacted] Opening cash offers,” the lawsuit states.
The deal saw Emanuel, Endeavor’s CEO, named CEO of TKO, with McMahon as executive chairman. Nick Khan, another defendant in the lawsuit, was named WWE president. TKO Sports began trading on the NYSE on September 12th.
Deadline has reached out to TKO Group Holdings for comment on the lawsuit.