411MANIA | Investors Sue Vince McMahon, Nick Khan & More Alleging ‘Sham Sale’ Of WWE
A group of WWE investors has filed a lawsuit against Vince McMahon, Nick Khan and more alleging a "sham sales process" that led to the WWE & UFC merger.
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A group of WWE investors has filed a lawsuit against Vince McMahon, Nick Khan and more alleging a “sham sales process” that led to the WWE & UFC merger. THR reports that the lawsuit was unsealed in Delaware Court of Chancery on November 22nd accusing McMahon of pushing a “quick sale” of WWE to Endeavor. The lawsuit called Endeavor head Ari Emanuel a “close friend and longtime ally” of McMahon’s and alleges that the “sham sales process” was conjured up by the WWE board of directors after Emanuel proposed a deal allowing McMahon to stay on as executive chairman of TKO Group and avoid any scrutiny in regard to the sexual misconduct allegations that led to McMahon’s exit from WWE. The complaint is filed against McMahon, Khan, Triple H, and former co-Presidents George Barrios and Michelle Wilson among others.
The suit alleges that the sales process was designed to favor Endeavor and cut out any other bidders who would seek to expel McMahon, and that at least two cash offers under better terms were turned down. The lawsuit claims that companies submitted cash offers to WWE at a value of $95-$100 and $90-$97.50 per share. The board allegedly failed to make counterproposals because those offers would have cashed out WWE stockholders and barred McMahon from rolling over his shares. The specific companies are redacted in the lawsuit but are described as “major institutions with significant access to capital… [with] compelling reasons to close an acquisition of WWE.”
The suit continues that “If McMahon was found to have breached his duty of loyalty, WWE stockholders could have sought his removal as a director. Such scrutiny appears to have prompted McMahon to seek a ‘quick’ sale of the Company that also allowed him to continue running WWE. Not only did he secure a future for himself at post-merger WWE, McMahon also stuffed his pockets and those of his loyalists before agreeing to a deal.”
The suit claims that the $21 billion price tag of the TKO-WWE merger undervalued WWE and is “far below the offers” that the board could have negotiated if it made any attempt to negotiate in good faith. It was filed by an Ohio pension fund and seeks to represent all stockholders who cashed out their shares when WWE and UFC were merged.
WWE has yet to comment on the suit.
