Endeavor Pulls the Plug on Its IPO in the Eleventh Hour

cc Thursday, September 26, 2019 latimes.com/news

Endeavor pulls the plug on its IPO in the eleventh hour

By RYAN FAUGHNDER, STACY PERMAN TIMES STAFF WRITERS Endeavor Group Holdings Inc., the owner of talent agency WME- IMG and mixed martial arts league UFC, has canceled plans for its highly anticipated initial public offering, reversing course the day before its stock was expected to begin trading on Wall Street, the company said Thurs- day, citing hazardous “market conditions.” The dramatic retreat came as Endeavor, run by Chief Executive Ari Emanuel of WME-IMG, left, with sportscaster Jim Gray, and Tony and Margaret McGregor, parents of UFC fighter Conor McGregor, in Ari Emanuel, appeared to rethink 2017. (Ethan Miller / Getty Images) its plans amid concerns that investors were cool on the stock and “Endeavor will continue to million by selling about 19.4 mil- given the weakening of the broad- evaluate the timing for the pro- lion shares for $30 to $32 a share. er IPO market. This month, office posed offering as market condi- Endeavor, backed by private leasing firm We Co., the parent of tions develop,” Endeavor said in a equity firm Silver Lake Partners, WeWork, withdrew its planned statement. was expected to become the first IPO. Earlier in the day, Endeavor talent agency owner to go public, Peloton Interactive Inc., a com- lowered the targeted price range of making it the subject of much pany that sells internet- its shares, according to a regulato- speculation in Hollywood. Silver connectedindoor exercise equip- ry filing. The Beverly Hills com- Lake Partners declined to com- ment, on Thursday saw its stock pany had expected to offer 15 mil- ment on the aborted IPO. drop more than 11% in its first day lion shares at $26 to $27 each, The change in course is a set- of trading after pricing its shares raising up to $405 million, the fil- back for Emanuel and Endeavor, at $29, which was on the high end ing said. Endeavor previously an- which analysts expected to pay of its projected range. Shares of ticipated raising as much as $619 down its substantial debt load with Peloton fell $3.24 to $25.76. ‘This is a blow for Ari. It’s definitely damaged his reputation. It will be interesting to see what happens next.’

LLOYD GREIF, L.A. INVESTMENT BANKER the proceeds. The company carries Founded by Emanuel in 1995, making into the business of own- long-term debt totaling $4.6 billion Endeavor has seen its business ex- ing content has made it a target of with total liabilities of $7.2 billion pand rapidly. The company the union. and cash on hand of $830.9 mil- merged with the legendary Wil- “Reports that the Endeavor IPO lion, according to recent filings. liam Morris Agency in 2009 and has been withdrawn show that in- Emanuel built his reputation acquired sports and fashion repre- vestors didn’t buy the company’s and that of Endeavor on a series of sentation leader IMG Worldwide conflicted business practices,” bold, risky moves and unexpected Holdings five years later for about WGA said in a statement. acquisitions, including Profession- $2.4 billion. Endeavor acquired The guild this year told its al Bull Riders. The IPO slated for mixed martial arts league Ultimate members to fire their agents, say- Friday was his biggest gamble to Fighting Championship in 2016 ing that agencies including En- date, intended to catapult Endeavor for $4 billion. William Morris deavor have prioritized fees that into a global juggernaut, one that Agency was founded in New York they receive for packaging TV and would shape the future of media in 1898. film projects for studios, rather and entertainment. Now that is all But Greif said investors were than client representation. The on hold and Emanuel is going to not convinced of the company’s writers union also has decried the have to define a new future for the prospects. agencies’ growing business of fi- company. “The devaluation today was too nancing and producing TV shows “This is a blow for Ari. It’s def- little, too late,” he said. and movies, alleging that the prac- initely damaged his reputation,” Some analysts had already tice creates conflicts of interest. said Los Angeles investment bank- questioned whether Endeavor, Endeavor and other agencies have er Lloyd Greif. “It will be interest- which has taken on substantial contended that they can manage ing to see what happens next.... debt to pursue acquisitions includ- conflicts and that their investments They are going to have to figure ing UFC and is in the midst of in content benefit their writer cli- out how to access the capital mar- a heated battle with Hollywood ents. kets.” writers, would be a good bet for John August, a screenwriter Endeavor’s IPO filings pitched investors. The firm initially filed best known for movies including the firm as a forward-looking me- its IPO paperwork with regulators “Big Fish” and “Charlie’s An- dia company, leveraging business- in May, just as a major feud be- gels,” wrote on Twitter: “No es including talent representation, tween talent agencies and the Writ- snark: I hope they find a way sports and production to navigate a ers Guild of America was gearing through this without becoming a rapidly changing entertainment up. The firm’s aggressive expan- publicly traded company. I don’t market. sion beyond traditional deal- think agencies can properly serve both clients and shareholders.”