According to POST Wrestling, a 75-page briefing was filed on Friday in advance of the trial scheduled to start next week. The briefing argues that the defendants were involved in a breach of fiduciary duty regarding their handling of the TKO merger, claiming that WWE was undervalued in the process. The plaintiffs contend that evidence presented at trial will demonstrate that WWE shareholders “should have received at least 52.8% of the equity in TKO Group Holdings, rather than the agreed-upon 49%.”
This development follows the plaintiffs citing an expert report by financial economist James L. Canessa, which they commissioned. The report estimates damages to shareholders could range from $446 million to $949 million.
Additionally, the briefing alleges that Vince McMahon “never intended” for his retirement in July 2022 to be permanent. Just hours after announcing his retirement, he spoke with TKO’s Ari Emanuel, who had expressed interest in acquiring WWE for an extended period. The briefing states that Emanuel met with Vince McMahon, Stephanie McMahon, and Nick Khan on August 10, 2022, to propose a merger between WWE and Endeavor. This meeting occurred after McMahon’s retirement announcement, which came following revelations that he had made “hush money” payments to four women over 12 years.
The briefing also highlights the long-standing relationship between McMahon and Emanuel, even including an image sent by McMahon to Emanuel on his birthday. The image features their heads photoshopped onto a poster from the comedy “Step Brothers.” The deal for Endeavor to acquire WWE was initially agreed upon through a handshake in March 2023, resulting in a 51-49 ownership split. In other words, shareholders received only 49% of the shares, contrary to the 52.8% the lawsuit claims they were entitled to. The crux of the argument is that Endeavor and WWE reached this agreement despite other potential deals that could have offered better value for shareholders.
The plaintiffs assert that McMahon, Emanuel, and the Raine Group timed the merger to benefit Endeavor by finalizing it before recent media rights negotiations. This timing could have increased WWE’s value and required a majority stake in TKO for WWE and its shareholders, rather than the minority stake that was ultimately settled upon. The briefing characterizes Khan, Triple H, and Frank Riddick III as “loyalists” to McMahon, indicating they received bonuses of $15 million (Khan) and $5 million (Triple H and Riddick).
As previously reported, the lawsuit, filed in November 2023, alleges that the TKO merger caused harm to WWE shareholders. It names McMahon, Khan, Triple H, George Barrios, and Michelle Wilson as defendants, claiming that WWE’s investigation into McMahon regarding sexual misconduct allegations was a “sham” and that McMahon manipulated the sale process to benefit himself. The trial is set to begin on Monday in the Delaware Court of Chancery.