WWE Shareholders File Lawsuit Alleging Merger With UFC Was “Sham Sales Process” That Left Out Other Bidders

Business

A group of former WWE shareholders has filed a class-action lawsuit alleging that the events leading up to the merger of WWE and Endeavor’s UFC into TKO Group this year resulted in a “sham sales process” designed to keep Vince McMahon in power and minimizing other bidders.

The suit, made public Monday in Delaware Chancery Court, asserts breach of fiduciary duty claims against the defendants: seven members of the WWE board that include 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 other bidders seeking [to] axe McMahon.”

Read the shareholder lawsuit here.

McMahon, who was forced out by the board as WWE president and CEO in 2022 amid sexual abuse and harassment allegations an an ensuing investigation, eventually returned with a newly installed board and announced a “strategic review process (i.e., a sale of the Company),” a move that, according to the suit, was McMahon “maneuvering to secure his power and control over the Company in the face of mounting stockholder discontent and government investigations into his illegal predatory behavior.”

The suit added: “McMahon immediately approached his long-time friend and Endeavor CEO Ari Emanuel, whom McMahon knew would allow him to remain at the helm of the post-transaction Company. … Thereafter, the WWE Board—which was controlled by McMahon— conjured up a sham sales process designed to favor Endeavor and exclude other bidders seeking axe McMahon.

The suit said 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 where WWE stockholders would receive consideration equivalent to $88.43 per share.”

The suit claims there were three other suitors for WWE besides Endeavor, two of which submitted higher per-share cash offers (all three names were redacted from the filing).

“By March 13, 2023, WWE had received three additional offers to acquire the entire Company: [redacted] submitted a cash offer at $95-$100 per share, [redacted] submitted a cash offer for $90-$97.50 per share, and [redacted] submitted a cash offer at an implied share price of $76.83,” it noted. “But because these offers all contemplated cashing out WWE stockholders (including McMahon—signaling his complete ouster from the Company and likely the wrestling world), the Board never bothered to make a counterproposal to [redacted].”

Eventually, the suit claims, the process led to the all-stock deal made official in September merging WWE and UFC into TKO Sports, with Endeavor owning 51% of the company and former WWE stockholders owning 49%. “The implied Merger consideration for former WWE stockholders was, at the time, $95.66 per share—which fell below both [redacted] opening all-cash offers,” the suit claims.

The deal saw Endeavor CEO Emanuel installed as TKO’s CEO, with McMahon its executive chairman. Nick Khan, another of the lawsuit’s defendants, was named WWE’s president. TKO Sports began trading September 12 on the NYSE.

Deadline has reached out to TKO Group Holdings for comment on the suit.

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