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Endeavor set to sell part of stake in Fortnite publisher Epic Games

General view of the 2019 Fortnite World Cup Finals - Final Round at Arthur Ashe Stadium (by Mike Stobe/Getty Images)

Endeavor, the US-based sports and entertainment group whose assets include the IMG agency and Ultimate Fighting Championship (UFC), is set to sell part of its stake in US video game and software developer Epic Games, producer of the hugely popular Fortnite title, as part of wider fundraising efforts.

Endeavor will sell a portion of its stake in Epic Games as part of the latter’s next round of fundraising, according to Bloomberg, citing people with knowledge of the matter.

Epic yesterday (Wednesday) announced that Fortnite now has more than 350 million registered players since it launched in 2017, and the company’s next round of fundraising is expected to see it valued at significantly more than the $15bn (€13.9bn) price tag it was granted back in 2018.

Epic Games hired Endeavor to oversee operations and logistics for last year’s inaugural Fortnite World Cup Finals with IMG Media managing the media rights distribution.

IMG recently began looking for a commercial director for esports to assume responsibility for generating and managing commercial relationships and sales within the media arm of the agency. In 2015, the WME-IMG agency (now Endeavor) created the ELeague alongside US media group Turner Broadcasting.

The impact of the Covid-19 pandemic on the live events market has seen Endeavor forced to dismiss, furlough or issue salary cuts to around one-third of its workforce, resulting in credit-rating firms downgrading its debt. While Endeavor is reportedly uninterested in selling any of its major assets, such as IMG or UFC, it will look to dispose of non-core parts of the company, particularly those than can secure a healthy return.

Speaking to the New York Post newspaper at the end of last month on its cost-cutting measures, Endeavor said: “The long-term prospects for Endeavor remain unchanged, but like other companies, we are taking a variety of actions to mitigate the impact of this pandemic.

“Since late March, we have been rolling out cost-saving measures in phases across our companies and geographies and intend to complete most of this process in late May. Approximately a third of our population will be impacted by reduced pay for reduced work, furlough, or position elimination, with the majority affected by reduced work and furlough.”

The first cost-cutting measures came in March as Endeavor laid off around 250 staff as the sports and film industries continued to be hit by the Covid-19 pandemic. The first round of cost cutting mainly affected operational staff unable to work from home and chiefly those at IMG Academy, the agency’s sports and educational performance unit.

In October, Endeavor formally ended its planned initial public offering, while keeping its options with regards returning to a trading of its shares on the stock exchange.

Endeavor initially pulled its IPO planned for September 27 after facing continued headwinds regarding the offering and its company financials. It had initially been expected that Endeavor would list on the New York Stock Exchange by August. At the time, Endeavor was carrying $4.6bn in debt.

In August 2019, Endeavor reported first-half revenues of $2.05bn and adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $249.7m, as the effect of a trio of hefty football media-rights contracts was felt.