Endeavor Group Holdings Inc. is delaying its initial public offering until September, at the earliest, as the parent company of Hollywood’s biggest talent agency works to finalize an acquisition.
The company, which also owns the Ultimate Fighting Championship and the Miss Universe pageant, had been planning to list its shares this summer, but has now opted to wait until the fall, people familiar with the matter said.
Endeavor is closing in on the purchase of premium-hospitality and live-events company On Location Experiences LLC for as much as $700 million, the people said. The deal, if completed, would aid the company’s push to diversify its revenue base.
Also behind the delay, the people said: Endeavor wants to be able to tout its second-quarter results and renegotiated contracts for soccer events, which it hopes will help achieve a higher public valuation.
The company is likely to seek a valuation between $7 billion to $8 billion and raise in excess of $500 million in its IPO, the people said, though such targets can always change.
Postponing an IPO is an unusual occurrence this year as companies race to list shares in one of the hottest markets for public offerings in decades. With the stock market near all-time highs and volatility minimal, until this week, company executives and bankers see it as an ideal time to go public and worry that the good times won’t last.
As of Thursday’s close, 135 companies have raised roughly $44.8 billion on U.S. exchanges, one of the highest-volume years on record by dollar value, according to Dealogic.
Most IPOs have performed well, with the exception of two of the highest-profile ones:
are both trading below their offering prices. In both cases, investors are wary of their slowing growth and elusive profits.
By contrast, Endeavor posted a profit last year. In 2018, the company generated net income of $231.3 million on $3.61 billion of revenue, compared with a $173.2 million loss on $3.0 billion of revenue the year before. It also reported net losses for each of the prior three years.
In regulatory filings, Endeavor has said that its direct operating costs increased by nearly $300 million in 2018 from the previous year, mostly due to its acquisition of media rights to major soccer events. In recent weeks, the company has renegotiated those contracts, which will bring down expenses related to its soccer offerings, one of the people said.
Endeavor was founded in 1995 and later merged with the William Morris Agency. The company has been trying to reinvent itself as an international entertainment and marketing powerhouse, but it remains heavily dependent on its business of representing actors, athletes and others.
In 2014, it acquired the giant sports and modeling agency IMG and in 2016 bought Zuffa Parent LLC, owner and operator of the Ultimate Fighting Championship.
Endeavor’s biggest source of revenue now is its entertainment and sports division, which negotiates media-distribution deals on behalf of more than 150 clients including the International Olympic Committee and National Football League.
Endeavor publicly filed for an IPO in May and more recently disclosed a “material weakness” in its internal controls over financial reporting. People close to the company say this issue, which Endeavor is taking steps to address, wasn’t the catalyst for the delay.
Endeavor plans to list its shares on the New York Stock Exchange under the symbol “EDR.”
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