Handelsbanken Fonder Challenges Endeavor’s $13B Take-Private Deal

Swedish banking institution Handelsbanken Fonder AB has launched a legal challenge against Endeavor Group Holdings‘ proposed $13 billion take-private deal. The move aims to halt the acquisition led by private equity titan Silver Lake Capital, which seeks to delist Endeavor from the New York Stock Exchange.

Allegations of Insider Favoritism Rock High-Stakes Buyout

Endeavor, the parent company of prominent entities like talent agency WME and iGaming giant OpenBet, faces allegations of unfairly favoring insiders over public investors in the buyout process. Handelsbanken Fonder contends that the deal violates Endeavor’s own corporate charter, specifically its equal-treatment provisions, by privileging certain shareholders, including Silver Lake, reported Complete Music Update.

While insiders like Silver Lake, alongside Endeavor’s top brass, stand to benefit from preferential treatment allowing them to roll over their shares into the newly privatized entity, public Class A stockholders are offered a meager $27.50 per share. 

This stark contrast in treatment has sparked outcry and legal action, with Handelsbanken Fonder arguing that such actions disregard the fundamental rights of public investors as outlined in Endeavor’s charter.

Citing analyst valuations that peg Endeavor’s true value significantly higher, between $30 and $33 per share, the Swedish investor makes a compelling case against the proposed deal. The absence of a vote or waiver to amend Endeavor’s charter to permit such disparate treatment further compounds the legal challenge.

Legal Challenge Threatens Endeavor’s $13 Billion Takeover by Silver Lake

In response to these allegations, attorneys representing Handelsbanken Fonder have taken the matter to Delaware’s Chancery Court, seeking both declaratory relief and compensatory damages. They request the court to not only recognize the lawsuit as a class action with Handelsbanken as the lead plaintiff but also to block the deal from proceeding on the grounds of charter violation.

At the beginning of April, Silver Lake, in collaboration with Endeavor’s management team and anchor investors, agreed to acquire Endeavor Group Holdings for $13 billion, valuing the firm at a significant premium. With the acquisition, Silver Lake aims to consolidate Endeavor’s position as a global leader in sports and entertainment, leveraging its strategic partnership and vision for continued growth.

Endeavor, whose shares currently trade at $26.36, however, faces mounting pressure as the legal battle unfolds. The take-private deal, initially slated to conclude by the first quarter of 2025, now hangs in the balance pending the court’s decision.

Silver Lake Capital, holding a commanding 68% stake in Endeavor since its IPO in April 2021, remains a key player in this unfolding drama. Endeavor, alongside Silver Lake, has yet to issue an official statement regarding the legal challenge.