WWE Shareholders File Lawsuit Alleging Merger With UFC Was “Sham Sales Process” That Left Out Other Bidders
In the unfolding saga of corporate maneuvering, a cadre of erstwhile WWE shareholders has embarked on a legal odyssey, launching a class-action lawsuit that paints the WWE and Endeavor’s UFC merger into TKO Group as a tapestry of deception.
WWE Shareholders File Lawsuit Alleging Merger With UFC
Filed in the hallowed halls of Delaware Chancery Court, the lawsuit, unveiled on a fateful Monday, weaves a narrative of a “sham sales process,” alleging machinations to fortify Vince McMahon’s grip on power while sidelining potential bidders.
The legal overture, a symphony of breach of fiduciary duty claims, is directed at seven WWE board members, including the venerable McMahon and the enigmatic Paul “Triple H” Levesque. The lawsuit contends that this board, led by McMahon, choreographed a deal that favored Endeavor, relegating other potential suitors to the sidelines.
McMahon’s turbulent history, marked by his ousting as WWE president and CEO in 2022 amid allegations of sexual abuse and harassment, forms a backdrop to the legal drama. The lawsuit suggests that McMahon’s return, orchestrated with a reshaped board, and the subsequent announcement of a “strategic review process,” were strategic moves to solidify his control amid shareholder discontent and government investigations.
The suit alleges McMahon’s swift outreach to Ari Emanuel, CEO of Endeavor and a long-time confidant, as the linchpin in a narrative designed to allow McMahon to retain control post-transaction. The WWE Board, under McMahon’s sway, purportedly concocted a deceptive sales process, favoring Endeavor and sidelining contenders with designs to dethrone McMahon.
The legal chronicle points to confidentiality agreements inked with potential bidders in early 2023. It contends that the ensuing proposal from Endeavor swiftly materialized, suggesting an orchestrated collusion between McMahon and Emanuel. Redacted names cloak three other suitors, two of which supposedly presented more lucrative per-share cash offers.
As the legal drama unfolds, it asserts that by March 13, 2023, WWE had received three additional offers, with the board allegedly neglecting counterproposals. The lawsuit culminates in the revelation that the process led to an all-stock deal, formally consummated in September, merging WWE and UFC into TKO Sports. Endeavor claimed 51% ownership, with former WWE stockholders left with 49%.
The lawsuit highlights that the implied merger consideration for former WWE stockholders fell below the redacted offers’ all-cash proposals. The denouement saw Endeavor CEO Ari Emanuel ascend to TKO’s CEO throne, McMahon assuming the mantle of executive chairman, and Nick Khan, another defendant, being named WWE’s president. TKO Sports embarked on its NYSE journey on September 12.
As the legal tempest rages, Deadline has sought commentary from TKO Group Holdings to illuminate their perspective on this labyrinthine lawsuit.
