WWE stock (WWE) is down more than 1% in premarket trading amid reports of a potential $9 billion sale to UFC owner Endeavor (EDR).
Veteran analyst Steve Cahall of Wells Fargo says he doesn't expect a counter-bid to emerge.
"We do not expect another bidder for WWE as Endeavor seems like the most logical partner given its acquisitive nature and similar/complimentary assets, including strong knowledge of the media market for selling content rights and managing talent," Cahall wrote in a note to clients.
Bloomberg first reported the advanced talks on Sunday evening. A source confirmed to Yahoo Finance that Endeavor is in advanced talks to acquire WWE for around $9 billion. A deal, which could come as earlier as Monday, would unite two of the most well-known sports entertainment properties.
Enedeavor CEO Ari Emanuel would be expected to run the combined company as CEO while WWE majority owner and Executive Chairman Vince McMahon would be expected to assume the executive chairman role.
WWE's market cap as of last Friday was $6.79 billon, making the estimated deal price at about a 32% premium.
"The premium is solid," Cahall stated, "and if McMahon is on board then it's done as WWE is a controlled company (and McMahon would need a hefty premium for a cash deal). We would view a deal with Endeavor favorably for WWE."
Cahall added that the combined entity would have to impress Wall Street with synergy potentials in order win over investors.
"Key to the market's view will be synergies EDR expects either from cost reduction, or rights revenues by leveraging the combined scale in live sports/entertainment," Cahall wrote. "2025-26 pro-forma NewCo EBITDA expectations will likely be the determinant for synergies and rights deals. If the outlook doesn't impress, there is future risk to WWE shares."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis or anything else? Email brian.sozzi@yahoofinance.com
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