of UFC and WWE is completed as proposed, the current shareholders of Endeavor Group Holdings—UFC’s parent, led by Emanuel and listed under the ticker symbol EDR—and WWE, with McMahon as executive chairman, will not pay any taxes. That doesn’t mean there’s anything nefarious going on in the deal. Rather, the tax-free transaction for shareholders has to do with the way the new corporation is being structured.
As tax expert Robert Willens explains, “to accomplish these goals, WWE will form a vertical chain of corporations, New PubCo, and its wholly owned subsidiary, Merger Sub. Merger Sub will be merged with and into WWE. WWE will be the surviving corporation in said merger and will become, for a moment anyway, a wholly subsidiary of New PubCo.
“Thus,” Willens says, “when the dust settles, the stock of New PubCo will be owned by EDR and the former WWE shareholders, with the former holding 51%, and the latter owning 49%, respectively, of the stock of New PubCo.” Willens notes that the transaction should qualify as a reorganization under Section 368 of the federal tax code: a “mere change in identity, form or place of organization of one corporation, however effected.
Let WWE be WWE; never to change
Bullshiiiiiieeeeet... Let WWE be WWE; never to change
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