Former WWE Shareholders File Class-Action Lawsuit Over TKO Group Merger
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 minimize 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.”
McMahon, who was forced out by the board as WWE president and CEO in 2022 amid sexual abuse and harassment allegations and an ensuing investigation, eventually returned with a newly installed board and announced a “strategic review process (i.e., a sale of the Company).” According to the suit, this move 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 lawsuit alleges that McMahon approached his long-time friend and Endeavor CEO Ari Emanuel, who McMahon knew would allow him to remain at the helm of the post-transaction Company. The suit also claims that the WWE Board, controlled by McMahon, “conjured up a sham sales process designed to favor Endeavor and exclude other bidders seeking to axe McMahon.”
The suit claims 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 where WWE stockholders would receive consideration equivalent to $88.43 per share.”
The suit also 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].”
The suit claims that the eventual 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%, resulted in McMahon retaining power and control of the company.
The deal saw Endeavor CEO Emanuel installed as TKO’s CEO, with McMahon as 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.