| Item 7.01 | Regulation FD Disclosure. |
On November 18, 2021, Endeavor Group Holdings, Inc., a Delaware corporation (the “Company” or “Endeavor”), issued a press release announcing the Transaction (as defined below), a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information contained under Item 7.01 of this Current Report on Form 8-K (including Exhibit 99.1), shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act except as may be expressly set forth by specific reference in such filing.
On November 18, 2021, IMG Worldwide, LLC, a Delaware limited liability company (the “Seller”) and subsidiary of the Company and Endeavor Content Parent, LLC, a Delaware limited liability company and direct wholly-owned subsidiary of Seller, entered into a Purchase Agreement (the “Purchase Agreement”), by and among Seller, Endeavor Content, and CJ ENM USA Holdings LLC, a California limited liability company and wholly owned subsidiary of CJ ENM Co., Ltd. (“Purchaser”). The Transaction (as defined below) relates specifically to the scripted portion of Endeavor Content Parent, LLC, including its TV studio, film studio, TV distribution and international TV production businesses, among other assets (“Endeavor Content”). Pursuant to the Purchase Agreement, among other things, and subject to the satisfaction or waiver of the conditions set forth therein, Endeavor Content will issue to Purchaser, and Purchaser will subscribe for and accept from Endeavor Content, a number of newly issued equity interests in Endeavor Content equal to eighty percent (80%) of the total issued and outstanding equity interests of Endeavor Content, on a fully-diluted basis (excluding equity interests related to any post-closing employee incentive plans) in exchange for proceeds equal to $775.3 million (subject to certain adjustments) at an enterprise value of $850 million, including $655.3 million in proceeds to be paid to Seller (subject to certain adjustments) and $120.0 million paid to Endeavor Content (subject to certain adjustments). Following closing, Seller will retain twenty percent (20%) of the total issued and outstanding equity interests of Endeavor Content, on a fully-diluted basis (excluding equity interests related to any post-closing employee incentive plans) (collectively, the “Transaction”). The Transaction implies an approximately $970 million post-money equity valuation for Endeavor Content and will include the assets and liabilities associated therewith, including Endeavor Content’s related production financing facilities, and of which Endeavor is entitled to sweep up to an additional $55.0 million of Endeavor Content’s cash (subject to certain adjustments) as part of the Transaction.
The consummation of the Transaction is expected to close in the first quarter of 2022, subject to the satisfaction or waiver of certain customary conditions, including, among others, (i) the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) obtaining other applicable regulatory approvals, (iii) the absence of any order or legal requirement that enjoins, restrains or otherwise prevents the consummation of the Transaction, (iv) the consummation of an internal reorganization (the “Internal Reorganization”) to be effected by Endeavor Content and Seller in advance of consummating the Transaction, pursuant to which Endeavor Content will transfer its non-scripted business and certain of its documentary, film sales and financing consulting services businesses to Seller and its affiliates and (v) customary conditions regarding the accuracy of the representations and warranties and material compliance by the parties with their respective obligations under the Purchase Agreement. The consummation of the Transaction is not subject to a financing condition.
The Purchase Agreement also contemplates that (i) Seller and Endeavor Content will enter into a transition services agreement as of closing, pursuant to which Seller will agree to provide a limited set of services to Endeavor Content following the closing of the Transaction and (ii) Seller and Purchaser will enter into an amended and restated limited liability company agreement of Endeavor Content (the “LLC Agreement”) as of closing, pursuant to which, among other things, the Company and its subsidiaries will be subject to a limited non-competition agreement with Endeavor Content for a maximum period of seven years. The LLC Agreement also contemplates that Seller (or its affiliate) will have the right to designate two managers to the board of managers of Endeavor Content, subject to a minimum ownership condition.
The Purchase Agreement includes customary termination provisions for both Seller and Purchaser, whereby the parties may terminate (i) by mutual written consent, (ii) following a permanent legal prohibition on consummating the Transaction, (iii) if the closing of the Transaction has not occurred within six months (the “Outside Date”) of the date of the Purchase Agreement, provided that if the conditions to closing are satisfied other than the obtainment of the Regulatory Approvals, then the Outside Date shall be extended to the date that is twelve months from the date of the Purchase Agreement (the “Extended Outside Date”) and (iv) following a breach by the other party of its representations and warranties or covenants contained in the Purchase Agreement that would result in a failure of a condition to closing of the Transaction, subject to cure rights.
