The merger that brought together the UFC and WWE under one company is being challenged in court by a group of shareholders after a lawsuit was filed in Delaware.
Court documents filed on Nov. 17 (released to the public on Nov. 22) revealed that a group of former WWE shareholders represented by the Laborers’ District Council and Contractors’ Pension Fund of Ohio have filed a lawsuit against Vince McMahon and several other high ranking executives from the professional wrestling outfit that challenges the merger with UFC that brought the two organizations together with the new company valued at over $21 billion.
The lawsuit alleges that McMahon “used his domineering personality and control over WWE to carry out his own personal agenda at the expense of the Company’s public stockholders” by maneuvering a sale of promotion to his “longtime friend,” Endeavor CEO Ari Emanuel.
McMahon — along with six other members of the WWE board of directors including his son-in-law Paul “Triple H” Levesque — orchestrated a deal “designed to favor Endeavor and exclude other bidders seeking [to] axe McMahon.”
McMahon had been ousted as WWE CEO and president amid investigations into sexual abuse and harassment allegations, which included millions of dollars paid out to settle potential litigation against him. Following a six-month departure from the company, McMahon suddenly returned to WWE using his power as the largest shareholder in the company to regain control and appoint several new members to the board.
Back in power, McMahon then began a “strategic review process” — essentially looking to sell the company — with the lawsuit alleging that he maneuvered “to secure his power and control over the Company in the face of mounting stockholder discontent and government investigations into his illegal predatory behavior.”
The lawsuit alleges that McMahon then reached out to Emanuel about a potential sale of WWE that “would allow him to remain at the helm of the post-transaction company.” When the merger between the WWE and UFC was announced, McMahon was confirmed as the executive chairman over the new company called TKO Group Holdings.
As part of the deal, Endeavor maintained 51 percent control in the new company with WWE shareholders holding onto the other 49 percent.
The lawsuit alleges that there were multiple other bidders interested in purchasing WWE with all cash offers that were substantially higher than Endeavor but those deals would have effectively ended McMahon’s reign at the company he founded.
According to documents in the lawsuit, WWE shareholders would receive “consideration equivalent to $88.43 per share” in the sale to Endeavor with two other potential suitors offering prices of $95 to $100 per share and $90 to $97.50 per share.
Because those offers would have purchased the whole company thus ending McMahon’s relationship with WWE, the lawsuit alleges that “the board never bothered to make a counterproposal” to the potential buyers.
The potential buyers’ names were redacted in the paperwork released by the Delaware Court of Chancery.
The merger, which officially closed in September, opened on the stock market trading at $103 per share but those prices have dropped dramatically with the closing price at $79.23 on Monday.
TKO Group Holdings has not issued a statement regarding the lawsuit.