Swede Bank Takes On Endeavor in $13B Buyout Battle Over Insider Favoritism
Challenging Endeavor's $13 billion private acquisition, Handelsbanken Fonder questions the deal terms.
Small fry Handelsbanken Fonder AB is going all-in against entertainment powerhouse Endeavor Group Holdings and private equity heavyweight Silver Lake Capital in a legal standoff over a proposed $13 billion take-private deal. The small Swedish banking institution is determined to stop the acquisition plot that could see Endeavor depart from the New York Stock Exchange.
Allegations Abound: Insiders Over Public in High-Roller Deal
Endeavor, owner of star-studded entities like WME talent agency and iGaming behemoth OpenBet, has earned itself a spot under the investigative spotlight. Handelsbanken Fonder AB, (the little guy in the banking world) accuses the firm of favoring insiders over public investors during the buyout process. The Swedish financier alleges that the deal violates Endeavor's own corporate charter, prioritizing certain shareholders, including Silver Lake, as reported by Complete Music Update.
While insiders like Silver Lake and Endeavor's top brass are promised the chance to roll over their shares into the privatized entity, public Class A stockholders are left with a meager $27.50 per share offer, causing quite the stir.
This glaring disparity in treatment has prompted a wave of protest and legal action, with Handelsbanken Fonder arguing that such actions disregard the fundamental rights of public investors as outlined in Endeavor's charter.
Citing analyst valuations estimating Endeavor's worth somewhere between $30 to $33 per share, the nimble Swedish investor is building a robust case against the proposed deal. Moreover, the absence of a vote or waiver to amend Endeavor's charter to allow such unequal treatment further fuels Handelsbanken's aggressive legal maneuvers.
The Swedish Challenger Hits Delaware's Court
Handelsbanken Fonder's legal team has taken the matter to Delaware's Chancery Court, seeking both declaratory relief and compensatory damages. They aim to have the case recognized as a class action with Handelsbanken Fonder as the lead plaintiff and to squash the deal if the court finds evidence of charter violation.
The $13 billion acquisition, first announced in early April, saw Silver Lake, Endeavor's management, and anchor investors agreeing to the deal, granting Endeavor a substantial premium. With the acquisition, Silver Lake intends to strengthen Endeavor's dominance in sports and entertainment, building upon its strategic partnership and growth strategy.
The lawsuit has started to weigh heavily on Endeavor, whose shares currently trade at $26.36. The take-private deal, initially set to complete by the first quarter of 2025, now hangs in the balance as it awaits the court's decision.
The game of high stakes continues, with Silver Lake Capital holding a whopping 68% stake in Endeavor since its IPO in April 2021. Endeavor and Silver Lake have yet to respond officially to the legal challenge.
Enrichment Data:
- Silver Lake Capital is a leading global technology-focused private equity firm based in Menlo Park, California, with over $40 billion in combined assets under management and committed capital.
- Endeavor Group Holdings operates as a global sports and entertainment company, with businesses in sports, fashion, and entertainment, including the Ultimate Fighting Championship (UFC), professional tennis management, and the Miss Universe beauty pageant. The company generated $4.6 billion in revenue in 2021.
- The New York Stock Exchange (NYSE) is the world's largest stock exchange by total market capitalization, with more than 2,700 domestic and international companies listed.
- The Delaware Chancery Court, often referred to as the nation's leading forum for corporate litigation, handles disputes related to Delaware Corporations. Delaware is home to 63% of all publicly traded U.S. companies and has one of the country's most flexible corporate laws.
- Class A shares generally offer voting rights for shareholders, while Class B or other share classes may have limited or no voting rights.
Sourced from: Marketwatch.com, Yale Law School, Investopedia, SEC.gov, Fortune.com, and Endeavor Group Holdings company website.
Handelsbanken Fonder AB, the Swedish financier, alleges that Endeavor Group Holdings, the owner of multiple prominent businesses such as WME and OpenBet, prioritized insiders over public investors during the proposed $13 billion take-private deal, a violation of Endeavor's corporate charter. In response, Handelsbanken Fonder has taken the matter to Delaware's Chancery Court, aiming to squash the deal if evidence of charter violation is found and seeking both declaratory relief and compensatory damages.
