Report: Investors "Struggling To Rationalise" Endeavor's Valuation Of WWE & UFC

Wall Street are seemingly less bullish about the WWE-UFC merger than Endeavor. 

It was announced on Monday, April 3 that WWE had been sold to Endeavor and the pro wrestling promotion will merge with UFC under a new parent company in a deal that will go through later this year. Endeavor will hold a 51% controlling interest in the new parent company, while WWE shareholders will hold the other 49%.

The transaction gives WWE a valuation of $9.3 billion or $106 per share before any post-closing dividend. UFC, meanwhile, was valued at $12.1 billion to give the new parent company a $21 billion valuation. 

The deal has been hailed by both Endeavor and WWE but the new owners of WWE "face a more challenging task with Wall Street", according to Puck. The all-stock deal adds an additional burden to Endeavor's long-term debt which already sits at above $5 billion and it was noted that "many investors are struggling to rationalise the $21 billion valuation Endeavor has put on the future combined company."

In particular, Endeavor's valuation of $9.3 billion is well above WWE's current market cap of $7.24 billion as of the time of writing. The agreed price of $106 per share is also above WWE's current stock price of $98.86.

Endeavor President Mark Shapiro addressed these concerns while speaking to Puck, stating: "People are just trying to get their arms around the deal. The revenue opportunities are huge."

To service some of their debt, Endeavor will look to sell some of their non-core assets like IMG Academy. There will also be no more mergers and acquisitions for the time being.