Plantiff Pre-Trial Briefing In Shareholder Lawsuit Argues WWE Was Undervalued In Merger

The plaintiffs in the WWE shareholder lawsuit have filed a pre-trial briefing laying out their argument for why the company was undervalued in the TKO merger. POST Wrestling reports that a 75-page briefing was filed on Friday ahead of the trial’s start next week. The briefing sees the plaintiffs argue that the defendants were part of a breach of fiduciary duty in their handling of the TKO merger.

As noted, the lawsuit was filed in November of 2023 and alleges that the TKO merger resulted in damages to WWE shareholders. The lawsuit names Vince McMahon, Nick Khan, Paul Levesque, George Barrios, and Michelle Wilson as defendants and says that WWE’s investigation into McMahon on sexual misconduct allegations was a “sham,” and that McMahon manipulated the sale process to Endeavor for his benefit.

The briefing argues that they will present evidence at trial that will show how WWE stockholders “should have received at least 52.8% of the equity in TKO Group Holdings, rather than the 49% agreed to.” As noted, the plaintiffs cited an expert report by financial economist James L. Canessa, who the plaintiffs retained, which estimates damages to shareholders as a whole ranged from $446 million to $949 million.

The briefing argues that McMahon “never intended” for his retirement in July of 2022 to be permanent and says that within hours of his announcement, he had spoken with Emanual, who he knew “had been interested in acquiring WWE for a long time.” Mark Shapiro is said to have sent a message to Endeavor that same day that read:

“Nick and Stephanie are going to take over the WWE for the next nine months. At the end of [] nine months Vince [will] be back with a new board or he will take the company private or he will sell it/coming to us. The race is on. The courtship is on.”

The briefing alleges that Emanuel met with McMahon, Stephanie McMahon, and Nick Khan on August 10th, 2022 to pitch a merger between WWE and Endeavor. This was, obviously, after McMahon had announced said retirement, which itself followed revelations that he had paid out “hush money” payments to four women over a 12-year period.

The briefing also notes that McMahon and Emanuel’s relationship goes back for decades, and the briefing even includes an image sent by McMahon to Emanuel on his birthday. The image is the poster from the comedy Step Brothers with McMahon and Emanuel’s heads Photoshopped onto it.

The deal for Endeavor to acquire WWE was made on a handshake deal in March of 2023 with a 51 – 49 split of ownership — in other words, shareholders would get 49% of the shares, rather than the 52.8% the lawsuit alleges they were entitled to. The argument is essentially that Endeavor and WWE agreed to the deal despite the fact that other deals could have resulted in better value for shareholders.

The plaintiffs claim that McMahon, Emanual, and Raine Group timed the merger in a way that would benefit Endeavor by happening before the most recent media rights negotiations, which would have driven up WWE’s value and required it (and by extension, WWE shareholders) a majority stake in TKO, rather than the minority stake that was decided. The briefing also refers to Khan, Triple H, and Frack Riddick III as “loyalists” to McMahon who were rewarded with bonuses of $15 million (Khan) and $5 million (Triple H & Riddick).

The trial is set to kick off on Monday in the Delaware Court of Chancery.