Endeavor Group holdings Inc (NYSE:EDR) Downgraded By Analysts

Endeavor Group holdings Inc (NYSE:EDR) stock rose 1.22% (As on April 3, 11:09:40 AM UTC-4, Source: Google Finance) after UBS downgraded the company to Neutral from Buy with a price target of $27.50, down from $31, after the company entered into an agreement to be acquired by shareholder Silver Lake with remaining shareholders receiving $27.50 in cash. UBS has based its downgrade on the expectation that the acquisition will proceed as planned, prompting the firm to align the price target with the proposed acquisition price. The adjustment in the stock rating to Neutral reflects the analyst’s view that the stock has limited upside potential beyond the agreed acquisition price.

Moreover, Seaport Research and Evercore ISI also downgraded Endeavor Group to Neutral-equivalent ratings. Guggenheim adjusted its stance on Endeavor Group Holdings Inc stock , downgrading from Buy to Neutral and revising the price target downward to $27.50 from the previous $36.00. The modification comes in the wake of Silver Lake, Endeavor’s largest shareholder, reaching an agreement to take the company private at a price of $27.50 per share. This offer represents a 55% premium over the unaffected share price.

The agreement for the acquisition was unanimously recommended by a Special Committee of Endeavor’s Independent Directors and has already been approved by stockholders holding a majority of the voting interests. The transaction is not contingent on further stockholder approval, but customary closing conditions and regulatory approvals must be met. It is anticipated that the deal will be finalized by the end of the first quarter of 2025. The transaction will be financed through a combination of new and reinvested equity from Silver Lake and additional capital anchored by investors including Mubadala Investment Company and DFO Management.

The analyst noted that the one-year timeline for the deal’s closure is likely linked to the gaming licenses held by OpenBet, a subsidiary of Endeavor. It had previously taken Endeavor just over a year to complete the acquisition of OpenBet. It was also mentioned that TKO, which is not involved in this transaction, stands to benefit as it remains a publicly traded company.

The analyst suggested that concerns regarding TKO’s balance sheet being utilized for Endeavor’s privatization were unfounded and that a capital return program for TKO could now be more probable, especially since strategic review and legal concerns that might have previously hindered such announcements have been resolved.

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