Investors Sue Over ‘Sham Sales Process’ In WWE-UFC Merger

Former WWE stockholders are not happy that McMahon allegedly ignored bigger, better options for a WWE sale in favor of a deal with UFC parent company Endeavor.

Being a publicly traded company isn’t all sunshine and dividends, as the new UFC-WWE entity TKO is learning quickly.

Since coming into existence and launching on the stock exchange in September, TKO’s value has dropped from $103 to $78.50. Not exactly a strong performance on launch. And now TKO has another problem: investors are suing Vince McMahon and other top WWE executives for selling to UFC parent company Endeavor despite there being bigger, better options on the table.

The suit from the Laborers’ District Council and Contractors’ Pension Fund of Ohio lays out all the peculiarities of the UFC-WWE merger: how McMahon returned from exile to stage a coup on the WWE board, allowing him to sell the wrestling promotion to “longtime friend” Ari Emanuel. The suit claims McMahon’s puppet board “conjured up a sham sales process designed to favor Endeavor and exclude other bidders seeking to axe McMahon.”

McMahon was seen as extremely toxic after being caught paying out millions from WWE coffers to cover up allegations of sexual harassment over decades. According to the filing, there were three all-cash proposals from unnamed groups to buy the WWE for more than Endeavor was offering, but all came with “Get Vince the F— Out” clauses.

McMahon would allegedly ignore those offers and push to accept the Endeavor offer without a shareholder vote or independent board committee.

So instead of investors getting paid upwards of $100 per share or more by one of the unnamed potential buyers, McMahon agreed to an all-stock deal with Endeavor at $95.66 per share that locked him in as executive chairman of the new TKO company. That stock has since dropped significantly, with many analysts (and Endeavor head Ari Emanuel) citing McMahon as a specific reason why.

The lawsuit hammers home one point over and over: the deal between McMahon and Endeavor undervalued WWE compared to other offers and should never have been accepted. The deal between McMahon and Endeavor was full of back-channeling and self-serving on the part of McMahon and his board. The deal was made quickly to prevent stockholders from stepping in and removing McMahon. The deal has been a big financial disaster for WWE investors.

We’ll see how this case develops, and if investors can get anything out of Vince after he sold off over $700 million in TKO stock recently.