Private equity group Silver Lake Management is readying a $30-a-share bid for Endeavor Group that will drop soon, according to analysts at Deutsche Bank.
That price would add up to a 24% premium over Endeavor’s $24.13 closing price in Wednesday’s session and would cost Silver Lake $7.4 billion, the investment bank estimated in a note to clients detailed by financial data provider TheFly.com.
The analysts lowered the firm’s price target on Endeavor to $32 from $35 in the note, but kept a “Buy” rating on the shares. The stock slipped 3 cents in midday trading to $24.10.
Deutsche Bank noted that the “almost simultaneous announcements” that Endeavor would pursue strategic alternatives — Wall Street talk for shopping the business for sale — and that Silver Lake would work toward a proposal to take Endeavor private are now four months old.
Los Angeles-based Endeavor said in October it was looking at different possibilities for its future, including possibly selling off pieces of the company, which includes — which includes Willam Morris Endeavor, IMG, and other holdings. It was a surprising announcement for a company that went public only three years ago and scored a success with the spinoff of TKO Group, which combined Endeavors UFC with WWE, the month before.
Silver Lake is expected to sell off some of Endeavor’s assets if the deal goes through.
There are many attractive reasons for Silver Lake buying Endeavor, the Deutsche Bank analysts said, even with a significant premium hike above the current stock price. The analysts said the likelihood that Silver Lake would walk away from the company it holds a 71% voting stake in are unlikely, and its equally unlikely that the two companies would agree to a deal at a price lower than the current trading value.
