WWE, Endeavor-owned UFC will merge to create $21 bln entertainment giant

World Wrestling Entertainment Inc (WWE.N) will combine with Endeavor Group-owned (EDR.N) mixed martial arts franchise UFC to form a new, publicly listed entertainment giant valued at about $21 billion, the companies said on Monday.

The deal unites two of the biggest names in wrestling and entertainment and caps a months-long sale process for WWE, overseen by its co-founder and executive chairman Vince McMahon who returned to the company's board in January.

McMahon will retain his role in the new company, which will be majority owned by Endeavor with a 51% stake, while WWE investors will own the rest. Hollywood power broker and Endeavor CEO Ari Emanuel will take the helm at the merged entity.

Under the deal that a source said was internally referred to as Project Stunner, UFC and WWE will also contribute cash to the new company so it holds nearly $150 million.

The agreement values each share of WWE at $106, representing a premium of 16% to the company's Friday closing and gives WWE an enterprise value of $9.3 billion.

Shares of WWE fell 4.5% in trading before the bell, while Endeavor was up 4%.

The new company will be listed under ticker symbol "TKO" on the New York Stock Exchange, the companies said.

In January, WWE said it would explore strategic options that could include a sale, shortly after long-time CEO McMahon's return to the company. It had hired Raine Group and law firm Kirkland & Ellis as advisers for the review.

McMahon had retired in July last year as the company's CEO and chair, following an investigation into his alleged misconduct. Co-CEO Stephanie McMahon, who single-handedly managed the mantle when her father exited, resigned a week after he returned in January.