Art and Business

Frieze exits the portfolio of the American group Endeavor

The delisting of the holding company results in the divestment of some assets, including the Frieze brand: who will have the courage to take over the seven art market appointments?

by Maria Adelaide Marchesoni

4 November 2024

3' min read

3' min read

What will be the future of Frieze? The question has nothing to do with the performance of the art market but is related to the press release that the American entertainment conglomerate Endeavor Group Holdings, parent company of Frieze, issued these days to declare to the market that the management has started an analysis to evaluate the possibility of selling some events from its portfolio, including under consideration, besides the Miami Open and Madrid Open tennis tournaments, the modern and contemporary art fairs operating under the Frieze brand.

The Beverly Hills-based company has engaged The Raine Group to assist it in the process, and "specified that it has no definitive timetable for completing the transaction and may not even result in any specific action". However, recent documents filed with the Securities and Exchange Commission explicitly say that Endeavor will have to "do its best" to shed some of its holdings - a disparate set that includes companies such as Frieze ... and the transaction is expected to close in the first quarter of 2025."

On the occasion of Frieze New York in the discussions among insiders some rumours had already emerged about a possible divestment of the trade fair business following the deal concluded by Endeavor Group Holdings a few days earlier with the private equity titan Silver Lake Partners, and how this deal might affect Frieze's business.

The agreement provides for the delisting of the NYSE-listed group (EDR today opened at $29.67) just three years after the controversial IPO. Endeavor shareholders will receive $27.5 per share in cash, representing a 55 per cent premium to market values.

Who would buy Frieze?

The most immediate, but also very far-fetched hypothesis would be that ofJames Murdoch, son of Rupert and founder of Lupa Systems and owner of all other art fairs as majority owner of Art Basel. The motive: get rid of the competition and take over Frieze, monopolising the global art fair circuit.

MCH Group, as stated in the half-yearly report: 'after having gone through several difficult years characterised by significant economic and financial pressures, it has made significant progress in the first half of 2024, continuing its remarkable turnaround and investing in stabilising its business activities. Although the group has achieved significant results, it has not yet reached profitability and the next goal is to break even at the end of 2024: to continue to increase efficiency in all areas and save costs. There would also be another obstacle to the eventual purchase, that of convincing the Swiss cantons, which still own a large slice of the Mch Group, to the deal.

Numerous hypotheses can be hazarded among conglomerates active in the fashion and entertainment segment because art fairs, besides being business moments for gallery owners, have increasingly become entertainment moments for passionate collectors.

Beyond who the buyer will be, it will be interesting to understand the value of the sale at a time when the art market is going through a problematic situation.

Frieze Activities

Endeavor became the owner of Frieze in 2016 and at that time the terms of the agreement provided that the sellers had a put option to sell their remaining 30% stake after the 2020 fiscal year. The company also had a residual 30% put and call option to be exercised after FY2020. The price of the put and call option was equal to Frieze's previous year's EBITDA multiplied by 7.5 times. In May 2023, the company exercised the call option to purchase the remaining 30% stake for $16.5 million.

In 2023, Frieze added two major US events to its portfolio: the Armory Show in New York and the Expo Chicago. The two operations marked a major consolidation move in the industry and brought the number of Frieze-branded fairs to seven worldwide. These include four fairs in the United States, underlining the continent's continued weight in the global art market after launching the New York edition in 2012 and the Los Angeles edition in 2019, and in 2022 the expansion continues with the inaugural Frieze Seoul, the first outpost in Asia.

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