Endeavor President Mark Shapiro Says Company Has ‘A Clearer, Simpler Story This Time Around’ – Deadline
Endeavor Market chairman Shapiro said the new public company has a cleaner and clearer story to tell on Wall Street compared to its first attempt at an IPO in 2019.
It begins its new chapter with a portfolio of assets poised to reap major benefits, the executive told Deadline, as Covid-19 steps down and cash flow from a 100% -owned UFC l ‘help pay off debt.
Since Thursday morning, Endeavor Group Holdings has been listed on the New York Stock Exchange. This is a second attempt to go public. The first was in the middle of a battle with the Writers Guild of America, and without such a big hit from the UFC, which the company had only one room in at the time. Today’s offer was concomitant with a buyout of the rest of the franchise that Endeavor did not already own.
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Shapiro, who had a long executive tenure at ESPN before joining Endeavor in 2016, acknowledged that the complex structure of the company might have given some investors pause, but: “It was the first time around. We now have a clearer and simpler narrative. “
“It’s a matter of time, investors and consumers become more familiar with the business,” he said in an interview.
Many companies in the media and entertainment industry have a multi-faceted DNA, he added. “Disney is a complex story, they are in every facet of the business – but it’s been about 100 years…. People know that, ”he said.
Endeavor shares got off to a good start, then fell below $ 24 – the company’s offer price set last night. Heading to the last hour of the trading day, it rose over 4% for the day to around $ 25.
Nick Einhorn, vice president of research at IPO-focused Renaissance Capital, said he would expect the stock to trade in a broad band, both above and below. below the offer price. Even so, he added, it’s usually best to close above the offer price at least on the opening day.
“What I would say about the overall deal is that it can be a difficult company to assess for investors due to its complex structure and the fact that it will be in Covid recovery mode in the near future. future, like many of them. its peers in the industry, ”he said. “It will be a tricky thing for investors to decide what the correct multiples to put on this.”
Shapiro, however, said he “was not too focused on this [the stock] done today or even day to day. It’s a long-term story, ”he said.
(Facebook is a legendary IPO case where the stock surged out of the gate, then fell well below the initial offer price in subsequent sessions – but it’s more than good since.)
The point is, Shapiro said, “We’re playing the long game. Our investors are playing the long game… This is the feedback we have given to all of our employees. Don’t be consumed, obsessed with it [stock price]. Don’t let this affect your mood. Don’t go too high on the highs or too low on the lows. “
Shapiro said the game plan was still to bring the whole UFC together – “we just didn’t know if we would be able to do that.” A private placement transaction separate from the IPO enabled Endeavor to do so. UFC President Dana White tweeted a photo of himself outside the exchange, noting that the mixed martial arts circuit is “now a public enterprise.” The message has been re-tweeted over 30,000 times.
The cash generated by the UFC’s pay-per-view business and the TV deals with ESPN and others will help address a concern that many observers of Endeavor’s business have pointed out in recent years: debt.
An SEC filing last week raised the company’s debt to $ 5.92 billion on a pro forma basis in December 2020.
“I don’t want to run away from debt,” Shapiro said. “It’s like that.”
But “We are in the early hours of this story,” he added. “The market knows about debt and doesn’t care. Having said that, one of the perks of getting UFC is that it’s a cash flow-generating activity, and we’ll use it to pay down debt. “
Considering the outlook for the company, he said, “We are comfortable with our situation and the market as well.” He pointed to the “high quality investors we brought into the private placement and offering today” – from former UFC owners Frank and Lorenzo Fertitta, to Larry Ellison and Michael Dell to the company. giant Silver Lake investment.
The negotiation of the agreements may not slow down anytime soon. Shapiro said Endeavor CEO Ari Emanuel is “highly acquisitive” and has made 20 acquisitions since the company’s inception. “We will seize” the development opportunities, he added.