Johann Werther / 11.01.23 / 12:46
The share of WWE (WKN: 928669) is up more than +25% over the past month to €90.36 on Vince McMahon’s selling ambitions. And all of a sudden it is said to have happened very quickly – because a buyer has been found.
WWE produces and distributes wrestling shows and television programs through a variety of channels, including its own subscription network, WWE Network. Based in Stamford, Connecticut, the company generated sales of around US$1.1 billion in 2021.
As in an article a few days ago (more here) already explained, ex-CEO Vince McMahon pushed his way back to power in WWE with his majority vote, with the stated goal of selling the company as quickly as possible.
After that, the stock took off accordingly and rumors arose as to who could take over the €5.5 billion company. The big streaming providers like Disney & Co. were very prominent in the room, but in the end it was someone else who made a takeover bid last night: Saudi Arabia.
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Conditions & Consequences
A Riyadh-based hedge fund is said to have been offered $6.5 billion for the entire company. The offering propelled the stock up +7.5% this morning.
Should the takeover actually take place at this price, there is still around 10% potential up to the final sales price of around €98.50.
The main reasons for the discount are the shareholders and courts, who may not want to readily agree to a sale to Saudi Arabia. Various wrestlers, primarily those from the female roster, will probably not accept this news without a word.
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Is merger arbitrage worth it?
But is it still worthwhile for investors to engage in merger arbitrage and perhaps take the last few percentage points with them through a squeeze-out?
The answer is definitely no. Investors should stay away from WWE stock for now as there may still be some trouble here that could tip the deal. Above all, the rumors of the company’s complete relocation to the Saudi desert could again cause disputes on the part of shareholders and US courts.
Even if the developments around the company are not exactly welcome for fans, private investors can at least look forward to the high takeover premium. Before Vince McMahon returned, the stock was trading at €66.40, around 36% lower than it is now.
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