A new lawsuit is challenging the WWE/Endeavor merger from earlier this year, alleging that the sale was a sham that ignored other offers and was made in order for Vince McMahon to maintain a role in the WWE. Several WWE officials including Vince McMahon have been named in the suit.

Bloomberg Law's Mike Leonard is reporting:

A pension fund sued Vince McMahon and other senior leaders of World Wrestling Entertainment Inc., challenging its $21.4 billion merger with Ultimate Fighting Championship, the mixed martial arts giant owned by media and talent conglomerate Endeavor Group Holdings Inc.

H/T Bloomberg Law

The Hollywood Reporter broke down what seems to be the essence of the lawsuit:

A suit, unsealed in the Delaware Court of Chancery on Nov. 22, alleges that McMahon pushed a “quick sale” of WWE to Endeavor chief Ari Emanuel, his “close friend and longtime ally” who proposed a sweetheart deal that allowed the wrestling mogul to stay on as executive chairman of TKO Group and avoid scrutiny in connection with sexual misconduct allegations that could’ve ousted him from the company. According to the complaint filed by investors, WWE board members “conjured up a sham sales process” designed to favor Endeavor and “exclude other bidders seeking to axe” McMahon, disregarding at least two all-cash offers with betters terms.

H/T The Hollywood Reporter

It's unknown who the other bidders were or whether they wanted to oust McMahon from the WWE if they were successful in acquiring the company. McMahon was under heavy scrutiny in 2022 when it was revealed that he had made several payments to females in exchange for their signing non-disclosure agreements. McMahon subsequently retired from the WWE, only to return in December 2022.

McMahon's controversial return was followed by him returning to power and replacing a significant number of board members. Vince's daughter Stephanie resigned from her position as WWE co-CEO upon Vince's return.

Who is Being Sued?

As for who is being sued, The Hollywood Reporter noted:

The complaint, filed by an Ohio pension fund, names McMahon, Khan, Levesque, Barrios and Wilson, among others. It contains various claims for breach of contract and seeks to represent all stockholders who cashed out their shares in the merger.

Allegations McMahon Stuffed His Pockets

According to CT Insider, the lawsuit alleges that not only was the deal made to keep Vince McMahon in the WWE but:

“Not only did he secure a future for himself at post-merger WWE, McMahon also stuffed his pockets and those of his loyalists before agreeing to a deal,” the lawsuit said. In particular, McMahon ensured that he and Nick Khan, now WWE’s president, receive “lucrative golden parachutes,” according to the complaint. The lawsuit also asserts that, before a deal was signed with Endeavor, WWE’s board granted cash bonuses of $15 million to Khan; $5 million to Paul “Triple H” Levesque, WWE’s chief content officer and the husband of Stephanie McMahon; and $5 million to WWE’s then-chief financial officer, Frank Riddick III. In addition to McMahon, several other defendants, including Khan, Levesque and Riddick, were also named as defendants in the lawsuit.

H/T CT Insider

This Isn't the First WWE Shareholder Lawsuit

This isn't the first shareholder suit that was filed after Vince McMahon returned to the WWE in December 2022 following his retirement earlier that year. The WWE has settled shareholder suits in the past but it's unknown what course of action TKO will take, that is will it try to negotiate a settlement or fight it in court.

This new suit could be bad news for TKO-Holdings' stock, which opened around $103 when the merger was completed but is now down to $78.18.

This lawsuit follows Vince McMahon selling some of his stock in TKO-Holdings. You may recall WrestleLamia's 10 November story where we discussed McMahon selling roughly 30% of his shares. As WrestleTalk's Connel Rumsey noted:

8,400,000 shares equates to around 30% of his company shares, with both Ari Emanuel and Mark Shapiro having interest in purchasing $1 million of shares each.

H/T WrestleTalk

The lawsuit also follows a statement filed by TKO-Holdings in its last financial earnings statement where it acknowledged:

Mr. McMahon’s membership on our Board could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.

H/T WrestleTalk

WrestleLamia will continue following this story.