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Investing.com -- Endeavor Group Holdings, Inc. (NYSE: EDR) shares fell sharply by 12% to $28.80, following a close at $32.59 on Friday, after Silver Lake announced it would proceed with its acquisition of the company on March 24 at a price of $27.50 per share. The private equity firm’s decision to stick to the previously agreed price, despite recent share price movements, has led to a negative market response.
Silver Lake’s confirmation of the acquisition price, which is lower than Endeavor’s recent closing price, appears to have unsettled investors. The $27.50 per share offer was a 57% premium over Endeavor’s unaffected closing stock price on October 24, 2023, the last full trading day before Silver Lake’s proposal to take the company private was announced. However, the current market price decline reflects concerns over the deal’s terms amid reports of shareholder arbitrage activities.
Silver Lake has stated that the inflated stock price due to hedge funds’ trading after the deal announcement does not warrant an increase in the merger consideration. The firm has also made it clear that it will not pay any merger consideration to dissenting shareholders at the time of closing or until there is a resolution on appraisal claims, in line with Delaware law.
Shareholders who have submitted valid appraisal demands by February 4, 2025, have the right to pursue their claims following the closing of the transaction. However, shares purchased in the market after this deadline do not carry the right to demand appraisal. Silver Lake has expressed its intention to defend any litigation related to the acquisition and to focus on Endeavor’s business operations post-acquisition.
The market’s reaction to the acquisition news reflects investor uncertainty regarding the final outcome for shareholders, particularly for those who had hoped for a higher payout due to the recent share price surge. Silver Lake remains committed to the transaction, emphasizing the fairness of the offer and its confidence in Endeavor’s future under its ownership.
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