Silver Lake Said in Deal for $2.4 Billion Purchase of IMG

Silver Lake Management LLC and William Morris Endeavor Entertainment LLC agreed to buy IMG Worldwide Inc. creating an agency with top talent cutting across both sports and entertainment.

The companies are paying about $2.4 billion to buy IMG from Forstmann Little & Co., according to a person with knowledge of the matter who asked not to be identified as the information is private. The deal was announced today in a statement that didn’t include terms.

Led by Ari Emanuel, William Morris represents some of Hollywood’s biggest actors, directors and writers, including Matt Damon and Ben Affleck. Adding IMG’s stable of athletes and models, including Peyton Manning and Gisele Bundchen, is a “home run acquisition,” said Shervin Mirhashemi, chief operating officer of Legends Hospitality Management, a joint venture between the New York Yankees and Dallas Cowboys.

“It allows them to be a truly integrated solution for their clients across a diverse set of verticals,” Mirhashemi said in an e-mail. “It will be interesting to see how the two companies and their cultures and people are integrated.”

IMG, based in New York, also manages fashion and sports events such as Mercedes-Benz Fashion Week and Wimbledon. Founded in 1960, the company has 3,500 employees globally, according to its website. IMG’s music clients include Taylor Swift and Justin Timberlake.

‘Strategic Fit’

IMG Chief Executive Officer Mike Dolan called the combination “an ideal strategic fit,” in a memo to the company’s employees.

“Together, we will have an unmatched client roster and strong relationships across sponsors, brands and broadcasters, as well as marquee assets in sports, events, film, television and fashion, leaving us better equipped to seize emerging growth opportunities,” Dolan wrote in the memo, which was obtained by Bloomberg News.

The auction for IMG had pitted Silver Lake, based in Menlo Park, California, and William Morris against CVC Capital Partners Ltd., owner of the Formula One car-racing series, people with knowledge of the matter have said. Carlyle Group LP was also among bidders earlier this month, the people said. CVC was working with former News Corp. executive Peter Chernin, the people said.

Entourage Inspiration

William Morris Endeavor was created when Emanuel’s Endeavor acquired William Morris in 2009. The Beverly Hills, California-based company is also a leading representative of authors and recording artists. In 2012, Silver Lake acquired a 31 percent stake in William Morris Endeavor. Emanuel was the inspiration for the twitchy agent Ari Gold on the HBO show “Entourage.”

William Morris’s strategy includes about $60 million to $100 million in cost saving synergies, according to two people with direct knowledge of the deal.

Former Madison Square Garden President Bob Gutkowski ahead of today’s announcement said William Morris will probably use IMG’s talent roster to create content for television and digital platforms.

“There are certainly content opportunities for William Morris,” said Gutkowski, who is now a partner in Lake Success, New York-based Innovative Sports & Entertainment, which advises private equity in sports, entertainment and media company investments. “There are opportunities to build a television arm of IMG.”

College Sports

IMG has the leading college sports marketing business in the U.S., amassing the rights to a number of marquee programs including Auburn University and Florida State University, who will meet for college football’s national championship next month.

The company said IMG’s college division, built by former Nascar Chief Operating Officer George Pyne, had $483 million in revenue in 2013, seven years after the unit’s creation. Earnings have grown at a compounded annual growth rate of 38 percent, IMG said.

Silver Lake and WME were advised and financed by J.P. Morgan, Barclays, RBC Capital Markets and Deutsche Bank Securities Inc., along with the Raine Group, Dean Bradley Osborne, Lazard and Simpson Thacher & Bartlett LLP. Mark Shapiro, a former executive at ESPN and Dick Clark Productions, also advised Silver Lake and William Morris.

Forstmann Little was advised by Morgan Stanley and Evercore Partners Inc.

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