A $13 billion entertainment acquisition has become a potentially costly court battle that involves billionaire investor Carl Icahn, private equity behemoth Silver Lake and dozens of hedge funds.
Silver Lake’s 2025 purchase of Endeavor, the entertainment firm that included a majority share in TKO Group Holdings (TKO), the owner of UFC and WWE, among its assets, is the question.
Silver Lake agreed to buy Endeavor in 2024 for $27.50 a share. According to the original transaction announcement filed with the SEC, the deal valued Endeavor at $13 billion of equity value and $25 billion of consolidated enterprise value.
The offer represents a 55% premium to Endeavor’s unmodified share price prior to Silver Lake’s public disclosure of its takeover bid.
In its official merger proxy, Endeavor stated a special committee consisting only of independent and disinterested directors studied, analyzed, and negotiated the acquisition before unanimously approving it.
The purchase was finally finalized on March 24, 2025, and Endeavor’s publicly listed stock ceased trading on the New York Stock Exchange.
The battle, however, over what those shares were really worth was not over.
Some hedge funds and other investors began to acquire shares in Endeavor after the transaction was revealed, as part of a specific technique known as appraisal arbitrage.
Those investors are looking to utilize Delaware’s appraisal procedure to claim that their shares were worth more than Silver Lake paid.
Silver Lake wants to put a stop to them.
The private equity company on Sept. 21 sued Icahn and scores of hedge funds in Delaware’s Court of Chancery seeking a rule that would bar investors who bought Endeavor shares after the acquisition announcement from obtaining appraisal claims, Reuters said.
The stakes might be huge.
Silver Lake could avoid paying hundreds of millions of dollars more than the purchase price if the verdict goes its way.
Silver Lake challenges hedge funds over Endeavor deal
The case revolves around an oddity of Delaware company law.
Shareholders who are entitled to do so may request an appraisal in the Delaware Court of Chancery under Section 262 of the Delaware General Corporation Law. The Court of Chancery shall evaluate the fair worth of their shares according to the standards set out in the legislation.
An appraisal lawsuit, as opposed to a classic shareholder class action, applies exclusively to the shares owned by the investors who bring the claim.
The court looks at the facts on valuation and decides what the fair value of the shares is. The value may be more or less than the amount paid in the transaction.
That technique put Endeavor squarely on the radar of investors who specialize in valuation arbitrage.
The reason involved TKO.
Endeavor has a majority investment in TKO Group Holdings, which owns UFC and WWE. Silver Lake and its affiliates beneficially controlled around 61% of TKO’s voting securities at the closing of the deal, TKO said in an SEC filing, noting that Silver Lake obtained control of TKO through its purchase of Endeavor.
Reuters quoted Silver Lake’s complaint as saying that TKO stock shot up after the Endeavor transaction was announced, and appraisal-focused hedge funds started buying up Endeavor shares.
Some investors acquired Endeavor shares at prices above the deal’s $27.50 price.
Silver Lake says such investors are not the kind of shareholders the Delaware appraisal system was intended to protect.
Related: One buyout rumor just turned these stocks into targets
The issue did not start only when the purchase was completed.
Silver Lake also spoke openly to investors who took substantial stakes in Endeavor and demanded appraisal rights before the deal closed.
In a March 2025 statement filed with the SEC, Silver Lake said it believed $27.50 represented a fair price for Endeavor and criticized investors who had purchased shares after the transaction was announced and then sought appraisal.
Silver Lake further indicated that stockholders seeking appraisal will not receive the merger consideration while their claims are outstanding.
That prior warning gives essential background to the present lawsuit: Silver Lake’s dispute with appraisal-focused investors was simmering before the Endeavor purchase was even completed.
The private equity firm’s newest claim still faces a major judicial challenge.
Delaware courts have already addressed appraisal arbitrage when investors purchased shares after a deal was publicized. In one Delaware Court of Chancery appraisal case, the court rejected an effort to impose a share-tracing requirement that was not part of the appraisal legislation.
The precedent does not resolve the present allegations. But it does help explain why Silver Lake is asking the Court of Chancery to review the limits of a tactic sophisticated investors have used in Delaware mergers.
Carl Icahn’s fight with Silver Lake takes a different path
Icahn’s involvement in the fight is a little different from the other hedge firms, who are pushing for an assessment.
The rich investor didn’t file an appraisal action.
Instead, Icahn filed a separate complaint, claiming in a class action that Endeavor’s management and Silver Lake violated its fiduciary obligations to shareholders and diverted Endeavor assets for insider profit, Reuters said.
A lawyer for the hedge funds refused to comment to Reuters.
Silver Lake’s latest complaint claims Icahn colluded with appraisal-focused hedge funds to buy shares in Endeavor. The accusation was refuted by Icahn and the funds, Reuters said.
Some of the funds were also charged by Silver Lake for failing to file mandatory securities reports about their Endeavor acquisitions.
The charges add another layer to a fight that was already focused on what Endeavor was really worth when Silver Lake took it private.
Icahn is well acquainted with shareholder battles.
The billionaire investor made much of his name as an activist investor, acquiring interests in firms and demanding boards and management teams make changes he thought would boost shareholder value.
But the Endeavor issue puts him at odds with one of the world’s biggest technology-focused private equity investors and places him in a larger battle over how investors may challenge take-private deals in Delaware.
More Lawsuits:
- Warner Bros. Discovery sues Amazon over executive poaching
- Ozempic maker takes biggest rival to court over weight-loss drug ads
- Meta Stock Faces New Scrutiny Over AI Layoff Claims
That greater context might be essential.
Delaware legislators in 2025 amended the state’s corporate law to make it tougher to file lawsuits related to certain transactions involving controlling or significant shareholders and harder to obtain company data for investigations of alleged conflicts of interest, according to Reuters.
The number of appraisal lawsuits in Delaware has been on the rise since then.
There are a few plausible reasons.
The price of purchase may be underestimated by more and more investors in the stock. The revised standards have also made traditional fiduciary obligation lawsuits more difficult.
Investors may also get access to private business records via appraisal processes.
The Silver Lake controversy is larger than a fight over one entertainment firm.
Silver Lake case could test a growing Wall Street strategy
The investing idea behind appraisal arbitrage is pretty simple.
An investor buys shares of a firm after an acquisition is announced, then searches for appraisal rights in Delaware.
The investor is essentially wagering that the court’s finding of fair value will come out better than accepting the merger deal.
But no payout is promised; the court’s appraisal might swing either way.
Silver Lake said the hedge firms involved in the Endeavor deal are leveraging a legal loophole to make money, not for its original purpose.
Meanwhile, the appraisal-focused investors are working in a legal environment where Delaware courts have previously allowed appraisal claims to be pursued for shares acquired following a merger announcement.
The new case now pits those contending viewpoints head-to-head before the Court of Chancery.
And what happens next may be worth a lot of money.
Silver Lake bought Endeavor for $27.50 a share in a deal worth $13 billion in equity value. The ensuing TKO performance made Endeavor’s underlying value more crucial for appraisal-focused investors.
Endeavor’s disappearance from the public market did nothing to diminish the relevance of TKO.
When Silver Lake announced the closing of the Endeavor transaction, it clearly stated that privately owned Endeavor would maintain its majority ownership position in TKO.
Now Silver Lake is seeking to prevent the appraisal technique from making the Endeavor transaction much more costly.
The case also underscores an unexpected impact of Delaware’s shifting corporate-law climate for investors.
Rules aimed at curbing certain shareholder lawsuits may be pushing savvy investors toward an alternative legal tactic.
That means Silver Lake’s battle isn’t only about the amount it paid for Endeavor.
Challenging a Wall Street deal on the chance the price wasn’t high enough is tough.
Related: Carl Icahn just made a troubling move with this embattled stock
