Private equity firm Silver Lake has asked a judge to rule that activist investor Carl Icahn and a group of hedge funds illegally colluded to derail the $13 billion acquisition of talent agency Endeavor Group Holdings Inc. The request targets Icahn's entity (IEP) alongside other funds, with the legal dispute involving billions of dollars and potentially reshaping the entire merger arbitrage industry.
Since the deal closed in early last year, Silver Lake, Endeavor, Icahn, and a host of shareholders have been entangled in multiple lawsuits. Shareholders argue that the buyout significantly undervalued Endeavor, the company led by Ari Emanuel that owns WME and IMG agencies, by billions of dollars. At the heart of the controversy is Endeavor's majority stake in TKO Group, the parent company of UFC and WWE. Between April 2024, when Endeavor announced the buyout plan, and March 2025, when the deal closed, TKO's share price surged, and it was during this period that a wave of investors began purchasing Endeavor stock.
Silver Lake already held voting control over Endeavor before the deal was finalized, allowing it to bypass a shareholder vote and push through its offer, which it claims included a 57% premium. Afterward, Icahn and others filed lawsuits, asserting that the transaction and management's self-serving actions harmed public shareholders. On Monday, Silver Lake and Endeavor launched a new legal offensive, seeking to exclude these investors' shares from the appraisal process. The appraisal proceeding, handled by the Delaware Chancery Court, aims to determine the company's fair value. Essentially, Endeavor and Silver Lake argue that these investors are latecomers who bought shares only after the deal was announced and therefore should not enjoy the rights associated with appraisal litigation.
The ruling in this case could become a landmark, directly defining the rights of merger arbitrage investors. This industry specializes in buying shares of publicly traded companies involved in announced acquisitions; when deals close, these investors often profit from small price movements and sometimes pursue litigation to secure higher buyout prices. Appraisal is inherently a high-risk maneuver, as the final price is determined solely by the judge, with the outcome potentially higher or lower than the originally agreed purchase price. In the Endeavor case, more than 70% of public shares have sought appraisal rights, making it the largest appraisal case in Delaware judicial history.
Silver Lake continues to insist that the $27.50 per share acquisition price is fair. The firm states that the vast majority of the shares in question were purchased long after the deal was announced, and that investors acquired the stock solely to initiate appraisal litigation, which is not the purpose of the relevant law. The filing reads: "The appraisal statutes were never intended to allow opportunistic funds like the defendants in this case to buy shares after a merger announcement and seek a windfall." Silver Lake also alleges that Icahn and two other major holders, Troluce Capital Advisors and Pentwater Capital, engaged in illegal collusion. According to the filing, these three investors failed to file required disclosure documents while increasing their stakes and coordinating a unified litigation strategy. Troluce co-founder Jonathan Christodoro was a senior executive at Icahn's firm before leaving in 2017. Icahn's entity is not participating in the appraisal proceeding but has filed a separate lawsuit accusing management of breaching fiduciary duties to shareholders.
Silver Lake's legal documents state: "It is an established fact that some defendants have engaged in illegal, coordinated, anti-competitive, and undisclosed actions to purchase Endeavor stock and implement a joint litigation arbitrage strategy." Representatives for Icahn, Pentwater, and Troluce have not yet responded to requests for comment. There is a long-standing feud between Silver Lake and Icahn. In 2013, Silver Lake partnered with Michael Dell to take Dell Technologies private for $25 billion. Icahn, along with other major investors, intervened in that deal, igniting one of the most intense takeover battles ever, believing the price grossly undervalued the company. After the acquirer raised its offer, shareholders approved the deal against Icahn's objections. Three years later, a Delaware judge ruled in favor of multiple investors in a case similar to the Endeavor dispute, determining that the 2013 Dell and Silver Lake acquisition price had undervalued the company.
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