Under an all-equity agreement valued at $3.25 billion, TKO Group (TKO, Financials) said on Thursday that it would acquire Professional Bull Riders, On Location, and IMG from Endeavour Group (EDR, Financials). Under the deal, Endeavor will acquire 59% of TKO, the parent company of UFC and WWE.

Under the agreement, Endeavor will subscribe to an equivalent number of TKO Class B common stocks and get around 26.14 million common units of TKO Operating Company. The deal is scheduled to be finalized within next year's first half.

The purchase increases TKO's footprint in the elite sports scene. Organizing major events as the Super Bowl, Ryder Cup, and the 2026 FIFA World Cup on Location, a live event planner handles. Though the purchase excludes IMG's licensing, modeling, and tennis representation businesses as well as part of its events portfolio, IMG, which generates and distributes sports content, will still be part of the transaction.

Along with a quarterly cash dividend of $75 million and a $2 billion share repurchase program, TKO also revealed financial robustness, but shares fell post the announdment nontheless.

Citing worries about the effect on profits and growth, Benchmark analysts cut TKO stock to a "hold" recommendation after the acquisition announcement. The analysts highlighted On Location's $1 billion in income but pointed out its 6% adjusted EBITDA margin as a weakness, therefore labeling the purchase as a possible "misstep."