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A group of former WWE shareholders has filed a class-action lawsuit alleging that events leading up to the merger of WWE and UFC affiliate Endeavor into TKO Group this year led to a “sham sell-off” designed to keep Vince McMahon in power and diminish others. Bidders.
The lawsuit, unsealed Monday in Delaware Chancery Court, asserts breach of fiduciary duty claims against the defendants: seven WWE board members including McMahon and Paul “Triple H” Levesque. It alleges that the actions of the McMahon-led board structured a final deal “designed to favor Endeavor and to exclude other bidders seeking [to] McMahon Axe.”
Read the shareholder lawsuit here.
McMahon, who was forced by the board to resign as WWE president and CEO in 2022 amid sexual assault and harassment allegations and the ensuing investigation, eventually returned with a newly appointed board and announced a “strategic review process (i.e., sale of the company),” which A move that, according to the suit, was a maneuver by McMahon to secure his power and control over the company in the face of growing shareholder dissatisfaction and government investigations into his illegal predatory conduct.”
The lawsuit added: “McMahon immediately reached out to his old friend and Endeavor CEO Ari Emanuel, who McMahon knew would allow him to remain at the helm of the company post-transaction. …Then, the WWE Board of Directors—which McMahon controlled—conjured up the process of A phony sale designed to benefit Endeavor and exclude other bidders seeking McMahon’s axe.
The lawsuit states that WWE began signing confidentiality agreements with potential suitors on February 6, 2023. He will receive consideration equivalent to $88.43 per share.
The lawsuit alleges that there were three other bidders for WWE besides Endeavor, two of whom made higher cash-per-share offers (the three names were omitted from the filing).
“By March 13, 2023, WWE had received three additional offers to acquire the entire company: [redacted] I made a cash offer at a price between $95 and $100 per share, [redacted] I made a cash offer of $90-$97.50 per share, and [redacted] It made an all-cash offer with an implied share price of $76.83. “But since all of these proposals were intended to cash out WWE shareholders (including McMahon – signaling his complete ouster from the company and potentially the wrestling world), the Board of Directors did not bother to present a counterproposal to [redacted]”.
Ultimately, the lawsuit alleges, the process led to an all-stock deal being formally concluded in September to merge WWE and UFC into TKO Sports, with Endeavor owning 51% of the company and former WWE shareholders owning 49%. “The implied merger price to former WWE shareholders was, at the time, $95.66 per share – the lower of both. [redacted] “Open all cash offers,” the lawsuit claims.
The deal saw Endeavor CEO Emanuel appointed as TKO’s CEO, with McMahon appointed as its CEO. Nick Khan, one of the other defendants in the lawsuit, was named WWE President. TKO Sports began trading on September 12 on the New York Stock Exchange.
Deadline has reached out to TKO Group Holdings for comment on the lawsuit.
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