Shareholder Files Lawsuit Challenging UFC/WWE Merger

According to a report from Bloomberg Law News, a shareholder has filed a lawsuit challenging the proposed merger between Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE). The lawsuit—filed by a pension fund—alleges that executives of the companies engaged in a “sham” bidding process. Within this blog post, our Miami shareholder litigation lawyer highlights the allegations raised in this case.

Background: UFC and WWE Agreed to a Major Corporate Merger 

In September of 2023, the UFC and the WWE—two of the most prominent fight-related entertainment brands in the country—agreed to a merger. In doing so, they created a new entity called TKO, which began trading on the New York Stock Exchange (NYSE). The move finalized a deal that had been announced by executives of the companies, including Dana White and Vince McMahon, earlier in the year. Notably, TKO began trading on the NYSE at just over $100 per share. As of the end of November, the company’s share price had dropped by nearly 25 percent.

Shareholder Lawsuit Filed: Allegations of “Sham” Bidding and Sales Process

 The merger between the UFC and the WWE has led to some legal complications. Specifically, the TKO Group and its parent company, Endeavor, have identified Vince McMahon’s ongoing role in the new WWE/UFC corporation as a potential liability risk. The observation was made by the company in its own SEC filings. Beyond that, the company is not embroiled in shareholder litigation.

As reported by Bloomberg Law News, a large pension fund in Ohio has filed a shareholder lawsuit on the grounds that its interests were damaged because the company’s manipulated the merger process through “sham bidding.” The complaint alleges that Mr. McMahon and his board allies dismissed more lucrative all-cash offers to carry out an outcome that would be better for them.

Notably, this is not the first shareholder lawsuit of this variety. Earlier this year, Bloomberg Law reported a similar lawsuit by WWE shareholder Dennis Palkon. Mr. Palkon challenged the manner of McMahon’s return to facilitate the sale. To be clear, no finding of wrongdoing has been made. Representatives of TKO declined to comment on the matter citing ongoing litigation.

Corporate Executives Owe a Fiduciary Duty to the Company 

Corporate executives hold a fiduciary duty to act in the best interests of their company and its shareholders. This responsibility mandates that they prioritize the company’s welfare over personal gains or interests. Executives must make decisions with due diligence and prudence, ensuring transparency and fairness. Breaches of this duty can lead to legal repercussions—potentially including a direct lawsuit from shareholders or a derivative action by shareholders.

 Contact Our Shareholder Dispute Attorney for Legal Guidance and Support

At Pike & Lustig, LLP, our Florida commercial litigation attorneys have considerable experience helping clients navigate complex shareholder disputes. Have questions about your options? We are here to help. Contact us today for your confidential case evaluation. With legal offices in Miami and West Palm Beach, we advocate for employers throughout Southeast Florida.

Source:

news.bloomberglaw.com/mergers-and-acquisitions/wwe-ufc-merger-challenged-in-lawsuit-against-mcmahon-triple-h