Activist investor Carl Icahn has launched a legal war against the former parent company of the UFC, alleging that its recent $25 billion buyout was a rigged game that shortchanged public investors and lined insider pockets. The target? Endeavor Group Holdings, the once-public entertainment empire that owned the majority stake in TKO Group Holdings—the UFC’s umbrella company.
Filed in Delaware, Icahn’s class action lawsuit accuses Endeavor execs and private equity giant Silver Lake of breaching fiduciary duties in a sweetheart deal that took Endeavor private for $27.50 per share. Icahn, who acquired a large stake in Endeavor stock in the weeks leading up to the deal’s close, claims the price grossly undervalued the company especially its TKO stake which surged nearly 80% in value during the buyout period.
“The stock was trading at $29.25 per share when the deal closed,” Icahn’s team wrote. “Silver Lake didn’t pay a fair price.”
Icahn Enterprises teamed up with Swedish bank Handelsbanken Fonder AB to lead the suit, claiming a combined stake of $757 million in Endeavor. They’re currently fighting for the lead plaintiff position in the case which would allow them to steer the litigation and select counsel—crucial powers in a case of this scale. The rival? A solo retail investor named Ricardo Garcia who held just $750 in shares.
“Icahn purchased its shares between March 3 and March 21, ‘with deep conviction’ the buyout was ‘unfair’,” Bloomberg reported.
Garcia’s lawyers argue Icahn is exploiting Delaware’s class action rules, buying in post-announcement simply to trigger a lawsuit. They’ve called the move “opportunistic” and one Delaware court has previously labeled similar behavior “evil.” Handelsbanken they claim isn’t innocent either, allegedly launching sloppy pre-suit discovery efforts and hitching itself to a “stockholder that likely lacks standing.”
Endeavor and Silver Lake, meanwhile, are staying quiet. They’ve maintained the $27.50 price was fair, citing a 55% premium over the stock’s pre-announcement value in 2023. But Icahn and others point to Endeavor’s hidden value—particularly its stake in TKO, home of the UFC and WWE. According to @fightoracle on X:
“Endeavor went private for $27.50 per share. Their stake in $TKO *ALONE* was worth $39.19 per share.”
The Delaware judge is expected to hear arguments from both sides on August 7. At stake is not just a massive payout but a broader legal reckoning over whether Endeavor’s executives including Hollywood power broker Ari Emanuel sold out their shareholders in a textbook lowball leveraged buyout.
This lawsuit could trigger a domino effect as other hedge funds are also pursuing parallel valuation challenges in what is shaping up to be the largest appraisal suit in Delaware history. And Carl Icahn, no stranger to brawling with private equity titans, seems ready for another round.
Read the full Bloomberg article here.
