UFC and WWE will team up to form a $21.4 billion sports entertainment company - Vince McMahon

In a groundbreaking move, the Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE) have joined forces to create a new sports entertainment company worth a staggering $21.4 billion.

Under this new arrangement, the UFC and WWE brands will be housed within a new publicly traded company, with Endeavor Group Holdings Inc. holding a controlling 51% stake in the new entity.

Existing WWE shareholders will retain a 49% stake. The UFC and WWE enterprises have been valued at $12.1 billion and $9.3 billion, respectively.

The new company will be led by Endeavor CEO Ari Emanuel, with Vince McMahon, the executive chairman at WWE, serving as executive chairman at the new company. Dana White will continue as president of UFC, while Nick Khan will be president at WWE.

The new entity aims to maximize the value of combined media rights, enhance sponsorship monetization, develop new forms of content, and pursue strategic mergers and acquisitions to bolster their brands further.

The deal will catapult WWE into a new era, after decades of functioning as a family-run business. Vince McMahon purchased Capitol Wrestling from his father in 1982, taking the regional wrestling business to a national audience with the likes of wrestling stars such as Andre the Giant, Hulk Hogan, and Dwayne "The Rock" Johnson.

The company, which later changed its name to World Wrestling Federation and then World Wrestling Entertainment, hosted its first WrestleMania in 1985. McMahon acknowledged in an interview with CNBC that there were several suitors for WWE, but that combining with Endeavor is the right move.

The transaction is targeted to close in the second half of the year, subject to regulatory approval. The new company plans to trade on the New York Stock Exchange under the "TKO" ticker symbol. Shares of WWE are up 33% this year, while Endeavor shares slipped less than 1%.