Ari Emanuel's William Morris Endeavor talent agency, and its private equity backer Silver Lake, won a bidding war for the huge sports and media talent agency IMG Worldwide in a deal believed to be worth about $2.3 billion.
The combination will bulk up William Morris' roster of star athlete clients and give it more exposure to the fast-growing sports market.
IMG, whose clients include top tennis player Novak Djokovic and super model Gisele Bundchen, would be a significant boost to William Morris, which already represents some of Hollywood's biggest actors and top names in music. William Morris merged with the Endeavor talent agency in 2009 to become one of Hollywood's biggest players.
IMG, founded in 1960 when it signed golfer Arnold Palmer, has 3,500 employees operating in 30 counties.
Two antitrust experts who did not want to be named in order to protect business relationships said the deal was likely to win approval. Both said there are already a range of companies in the talent industry, each with a different niche and the barriers to entry do not seem high.
While the acquisition makes strategic sense for William Morris, it would have to be well executed to avoid losing clients and to maintain revenue while cutting costs, the source said.
The sale of IMG was driven by the trustee running the estate of Teddy Forstmann, whose private equity firm, Forstmann Little & Co, acquired IMG for $750 million in 2004. The $2 billion plus price tag creates a significant return for investors.
William Morris beat out a consortium of talent agency ICM Partners Inc and private equity fund manager Carlyle Group LP , which were also finalists in the sales auction. Also bidding was buyout firm CVC Capital Partners Ltd, which had teamed up with Chernin Group LLC, Reuters previously reported.
The different cultures at the two companies may, however, be a challenge to integrate because IMG is centered on sports and William Morris is steeped in Hollywood, the person said.
Forstmann Little has held onto IMG longer than a typical investment period for private equity, and for years it has rebuffed overtures from prospective buyers. Buyout interest increased following Teddy Forstmann's departure in April 2011 as IMG chairman and chief executive. Later in the year he died.
Buyers that had approached Teddy Forstmann included former Yahoo CEO Terry Semel, who was willing to pay $1.5 billion in 2008. Sources told Reuters at the time that Teddy Forstmann wanted at least twice the amount.
Silver Lake acquired a minority stake in William Morris Endeavor last year. Mubadala Development Co. will be a minority investor in the transaction, according to a statement.
Ari Emanuel's talent agency wins bidding war for IMG
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