Good morning, and welcome to the conference call for TKO Group Holdings. I'm Seth Zaslow, Head of Investor Relations for TKO. Thank you for joining us on short notice. Earlier this morning, we issued a press release, which you can view on our investor relations website. We've also posted a presentation that will accompany this call to our investor relations website. A recording of this call, as well as the presentation, will be available via our website for at least thirty days. Joining me on today's call are Mark Shapiro, TKO's President and Chief Operating Officer, and Andrew Schleimer, our Chief Financial Officer. Mark and Andrew will provide prepared remarks. We will not be taking questions on this call. The purpose of this call is to provide you with information regarding the announcements contained in the press release we issued a short while ago.
I wanted to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties, and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.
Reconciliations between GAAP and non-GAAP metrics can be found in our presentation issued today, as well as the information posted on our IR website. With that, I'll now turn the call over to Mark.
Thanks, Seth, and thank you all for joining us today. Before I get into today's announcements, I want to first address our third quarter earnings, which we will issue on Wednesday, November 6th, after market. While we will be discussing our performance for the quarter in greater detail on November 6th, in terms of a preview, I would tell you that we had a solid quarter, and business at TKO, UFC, and WWE remained strong. On the heels of our performance, we plan to guide to the upper end of our previously articulated full-year range for revenue and Adjusted EBITDA. Andrew will provide more color at the end of our presentation. With that said, our focus for today is the board approval of a significant capital return program and acquisitions of Professional Bull Riders, also known as PBR, On Location, and IMG.
As we've previously discussed, formalizing a robust and sustained capital return program has and will continue to be one of our top priorities for our company, employees, and our shareholders. As such, I am pleased to announce today that our board has authorized a significant capital return program, inclusive of a $2 billion share repurchase of our Class A common stock over the next 3- to 4-year period. In addition to that, they've authorized a $75 million quarterly cash dividend. Separately, we also announced this morning that TKO has entered into an agreement with Endeavor to acquire, first, the world's premier bull riding organization, Professional Bull Riders, again, also known as PBR, which will now give us a third rising sports league. Second, the global leader in sports premium hospitality On Location, which of course, already powers premium experiences at WWE and the UFC.
Third, legendary media rights and content production powerhouse, IMG, which has been in business since 1960. PBR, On Location, and IMG are industry-leading assets that enhance TKO's portfolio and strengthen our position in premium sports around the world. Within TKO, they will help power the growth of our revenue streams and position us well to capture even more upside from some of the most attractive parts of our sports ecosystem: media rights, live events, ticket sales, premium experiences, brand partnerships, and of course, site fees. Make no mistake about it, these businesses are all attractive in their own right, but we envision them fueling the overall TKO proposition. They are true differentiators. Together, these announcements reflect the continued momentum and strength we're seeing in both UFC and WWE.
In the eighteen months since we announced the formation of TKO and the thirteen months since the deal actually closed, both businesses have continued delivering record financial results, and we've made significant progress in the integration and efficiency of these highly complementary businesses. By implementing a robust and sustained capital return program and adding these strategic sports assets, we expect to create incremental value for our shareholders at TKO on a long-term basis. Now, I'll provide an overview of the strategic rationale for the acquisitions, and then I'm going to hand the call over to Andrew to provide a financial overview of the transaction, as well as discuss the capital return program in more detail.... Put simply, we believe these industry-leading assets meaningfully enhance TKO's portfolio.
In addition to complementing TKO's existing core UFC and WWE businesses, the strategic acquisition of these sports assets expands TKO's operational footprint in the fast-growing premium sports market and enables direct participation in the upside from partner leagues and partner events. As we've said on many occasions, TKO will be opportunistic, selective, prudent, and disciplined when it comes to M&A. Today's announcement checks all those boxes. Another sports league, PBR, is a natural fit in TKO's portfolio. Similar to UFC and WWE, with PBR, we will now own and control another sports league. PBR hosts 200 live events each year, with well over 1 million fans in attendance. The league has grown notably by adding a team series competition with 10 teams, just had the championship last weekend in Las Vegas, including two recent team sanction sales in excess of $20 million each. More to come on that front.
We expect to leverage multiple areas of growth, including media rights, live events, sponsorship, consumer products, and site fees to continue to grow this business. We'll also look to leverage the core competencies of TKO to realize cost synergies. The concept of having three of our sports leagues on one weekend in one city is at once exciting and achievable, not to mention the impact it would have on synergies. On Location is the clear leader in premium sports hospitality and live experiences. On Location is the exclusive provider of corporate and fan hospitality for marquee global sports leagues and organizations, including the NFL, the International Olympic Committee, and most recently, the FIFA World Cup, which will be staged in Canada, the US, and Mexico in 2026. The experience economy remains extremely strong.
Consumer demand for the type of bespoke experiences that On Location offers remains quite healthy and is expected to continue to grow at attractive rates going forward. IMG is no stranger to the sports community. IMG is a renowned brand and global leader in sports rights management, production, and digital content. IMG services iconic events and leagues, including the NFL, the NCAA, Wimbledon, as well as our owned assets, UFC, WWE, and soon to be PBR. IMG also produces thousands of hours of content annually for clients, including the EPL, the English Premier League, and Major League Soccer. With operations in 35 countries, the scale and market intelligence that IMG possesses is unmatched and will benefit all of TKO's businesses, especially in media rights. We believe these assets will expand UFC's and WWE's leadership in premium sports and entertainment globally and create new opportunities for our signature brand and clients.
Notably, and let me underscore this, these are the only assets TKO will acquire from Endeavor. I want to reiterate a few key reasons these assets both complement TKO's existing business and at the same time, position us for accelerated growth. First, these strategic sports assets are well-established with meaningful upside. Second, TKO's leadership team knows these businesses well, and we're confident we can create incremental value over time. Third, they expand TKO's exposure to the most iconic global sports brands and commercial partners in the most attractive segments of the industry. Fourth, we believe investments and strategic enhancements recently made in each of these businesses, such as the customer data platform we built for On Location for the Paris Olympics, will power profitable growth for On Location, but also PBR, IMG, and TKO as a whole.
Expanding TKO's operational footprint will allow us to take advantage of growth opportunities in multiple areas, including domestic and international media rights, live events, both in terms of ticket yield and site fees, and global partnerships and sponsorships. Through this deal, we capture more of the ever-expanding global market for premium sports rights, live events, and sponsorship. These acquisitions give us the ability to better deliver incremental value for both our clients and TKO. Our long-standing relationships with the NFL, the English Premier League, Wimbledon, and the Olympics uniquely position TKO in the global sports industry. In closing, I want to underscore that TKO, without question, is and will continue to be fueled by UFC and WWE, which we anticipate will clearly represent the vast majority of TKO's Adjusted EBITDA.
The addition of PBR, On Location, and IMG strengthens our ability to benefit from secular industry tailwinds and strengthens our leadership position in the premium sports and sports entertainment marketplace. Our conviction in TKO's potential for long-term growth and value creation has never been stronger. Lastly, to note, as was publicly disclosed this morning, and for clarity and the avoidance of doubt, our CEO, Ari Emanuel, and myself have waived our asset sale bonuses tied to TKO's acquisition of any Endeavor businesses.
...And with that, I'll thank you for your time and turn the call over to Andrew.
Thanks, Mark, and good morning. I'll start with a financial overview of the acquisition of PBR, On Location, and IMG, and then discuss the capital return program we announced this morning. We are acquiring these businesses in an all-equity deal valued at $3.25 billion. Endeavor will receive approximately 26 million common units of TKO OpCo and an equal number of shares of TKO's Class B common stock. The amount of shares has been fixed at signing. Pro forma for the transaction, Endeavor's ownership of TKO will increase from approximately 53% to approximately 59% on a fully diluted basis. The transaction is expected to close in the first half of 2025 and is subject to customary adjustments, which will be settled in cash and equity.
The all-equity structure of the transaction is a clear indication of the confidence that Silver Lake and Endeavor have in TKO. Similar to the acquisition of UFC in 2016 and of WWE last year, we expect to realize net operating synergies from this transaction. Our current target is in excess of $30 million of annualized run rate savings. This amount reflects the elimination at closing of the services fee that TKO currently pays Endeavor, as well as the benefit of running these businesses more efficiently together. These savings, however, are expected to be partially offset by incremental costs that TKO will incur to replicate the support that Endeavor is currently providing us under the services agreement. Slide 9 provides a financial overview of the acquired businesses.
UFC and WWE will continue to represent the vast majority of TKO's Adjusted EBITDA, and as such, will remain the primary driver of our performance going forward. On a combined run rate basis, we estimate that the acquired businesses will contribute approximately $2.1 billion of revenue and approximately $265 million of Adjusted EBITDA for the full year 2025. As detailed in the appendix of this presentation, these amounts include adjustments for the impact of normalizing the multi-year nature of certain On Location partners, including the Olympics and FIFA. It also includes the $30-plus million of expected cost synergies I mentioned earlier in my remarks. With that, the all-equity purchase price of $3.25 billion implies a multiple of approximately 12 times combined run rate Adjusted EBITDA, inclusive of synergies.
As Mark mentioned, the strength of our balance sheet and financial profile allows for the implementation of the robust capital return program that we announced today. Our board has authorized a $2 billion share repurchase program. We intend to repurchase shares of our Class A Common Stock, and we expect the program to commence following the close of the transaction. The program, however, is not conditioned on the closure of the acquisition, and we anticipate completing it within a period of three to four years. We've also announced the authorization of a $75 million quarterly cash dividend program. The dividend program will involve a $75 million quarterly distribution by TKO Operating Company, and the holders of TKO Class A Common Stock will receive their pro rata share of the distributions paid under the program. We intend to make the first dividend payment on March 31st, 2025.
Since TKO was formed, we've continued to naturally delever through growth in Adjusted EBITDA, as well as the generation of Free Cash Flow. Our Net Leverage has decreased from 2.35 times as of September thirtieth, twenty twenty-three, to 2 times as of June thirtieth, twenty twenty-four. During this period, we have generated significant Free Cash Flow, opportunistically used some of this cash to repurchase stock, and increased our cash and cash equivalents by almost $100 million. This organic delevering, plus the durability and visibility of our business, has and is expected to continue to create significant financial capacity. As we've previously articulated, our target for Net Leverage is up to 3 times based on the financial profile of our business.
The strength of our balance sheet and attractive financial profile has put us in the enviable position to consider a wide spectrum of opportunities to increase shareholder value, including returning capital to shareholders in the form of both share purchases and dividends. In conclusion, we are extremely excited about today's announcements and the road ahead for TKO. We look forward to sharing more details about our Q3 performance on November sixth. As Mark mentioned, we saw continued strength in the business, driven by demand for our live events and content, as well as the continued realization of cost efficiencies. In the quarter, we held UFC 306 at Sphere, which set a number of records, including highest grossing event of all time for UFC and Sphere, and highest grossing sponsorship sales for a UFC event.
At WWE, SummerSlam, held in Cleveland, also set a number of records, including the highest grossing gate for a non-WrestleMania event in history. We also plan to guide toward the upper end of our range for both revenue and Adjusted EBITDA, given our continued strong performance and increased visibility as we near the end of the year. With that, I'll turn it back to Seth.
Thanks, Andrew. Thank you, everyone, for joining us today and for your interest in TKO. This concludes our call.