Photo by Neilson Barnard/Getty Images for LACMA
Endeavor had been set to go public with their IPO on Friday, September 27th. But, amid reports that demand may not meet expectations, it looks like those plans are on hold.
Ever since the UFC’s parent company, WME-IMG, announced that they were planning a public stock offering back in the spring, the watchword from financial advisors has been ‘caution.’ The corporate entertainment giant that Endeavor has become is laden with debt, largely due to their aggressive acquisition of sports and media organizatons like the UFC.
Initially set to go public earlier this year, Endeavor delayed their stock offering over the summer to finalize the acquisition of OnLocation Experiences—which offers VIP-style packages for sports events and concerts, among other things. However, they sounded like they were finally ready to hit the stock market this week, with an IPO set to go public early Friday, September 27th. In the weeks leading up to the offering, the LA Times reported that Endeavor had hoped to raise somewhere in the neighborhood of $600 million dollars, at a share price of $30-32.
The New York Post reported on Wednesday that those expectations may need to be scaled back somewhat. Endeavor recently released their ‘road show’ video package, meant to entice potential investors. But, according to the Post, the response has been less than electric. “It was not received well,” a source was quoted as saying, of the company’s presentation. And while some insiders were quoted as doubting that Endeavor would pull their IPO as a result of its poorer than hoped reception, the Wall Street Journal now reports that that’s exactly what has happened.
A lack of excitement around Endeavor’s offering was expected to push their stock as low as $25-26 a share, or closer to $484 million for the ~19 million shares. That’s money that WME-IMG may have hoped to use to upgrade their recent “B” credit rating and to pay off incremental debt. There’s even been some speculation as to whether the success or failure of this offering could lead to an IPO for the UFC itself. According to Barron’s Financial and Investment News, “There are provisions in their ownership agreement that could trigger an early IPO—and by August 2021, any of the three owners can individually demand that the [UFC] go public.”
This may be nothing more than a short term delay, with Endeavor re-working their plan to go public an re-entering the market some time in the not too distant future. But, if the company can’t get the financial windfall they were hoping for, it could be that the UFC’s ownership will start looking a lot more closely at the extra value that can be had by selling shares in the world’s largest MMA promotion.