Competitor reportedly interested in acquiring Penn Entertainment

Penn Entertainment Inc. has reportedly been approached by Las Vegas-based Boyd Gaming about a possible acquisition.

Reuters reported Thursday night that Boyd has expressed interest in acquiring the Wyomissing-based Penn.

On Friday afternoon, a spokesman for Penn Entertainment told MediaNews Group that the company was “declining to comment on these reports.” Boyd Gaming did not respond to requests for comment about a possible acquisition.

Penn Entertainment shares were trading at $19.58 per share by mid-afternoon Friday, after closing on Thursday at $20.04. The company’s 52-week high was $29.28, while it’s 52-week low was $13.50, according to NASDAQ.

Boyd’s stock meanwhile was trading at $53.44 by mid-afternoon Friday after closing Thursday at $52.74.

Reuters reported that Penn has a market value including debt of more than $9 billion, while Boyd is a smaller company with a market value including debt of $7.8 billion.

In May, shareholder Donerail Group sent a letter to David A. Handler, Penn’s chairman of the board of directors, urging the company to explore a sale. In the letter, Donerail Group stated a belief that the company’s current stock price is “significantly below the intrinsic value of the Company and that PENN’s suite of highly strategic casino assets alone could be worth more than double the Company’s current market capitalization.”

Penn operates 43 properties in 20 states, and offers online sports betting in 19 jurisdictions and iCasino in five jurisdictions.

In August 2023, Penn entered into an exclusive U.S. online sports betting agreement with ESPN Inc. and ESPN Enterprises Inc. to secure the rights to the ESPN BET trademark for online sports betting in the U.S. for an initial 10-year term. That agreement can be extended for an additional 10 years if both companies agree.

Penn Entertainment agreed to pay $1.5 billion in cash payments to ESPN over the initial 10-year term. In addition, Penn will also grant ESPN rights worth about $500 million to purchase shares in Penn.

ESPN BET went live in 17 states in November 2023. By March of this year, it was live in a total of 18 states.

In connection with the ESPN deal, Penn divested its sports media site Barstool Sports, selling 100% of the Barstool Sports Inc. common stock to founder David Portnoy in exchange for certain non-compete and other restrictive covenants. The company had acquired a 36% stake in Barstool in January 2020, for $163 million.

Before any potential deal could move forward between Boyd and Penn, it would require approval from regulators in the states the two entities operate. In addition, Disney would need to approve any potential deal, because of its ownership of ESPN.

According to information on its website, Boyd Gaming operates 28 gaming entertainment properties in 10 U.S. states. It also manages a tribal casino in northern California, and operates an online casino gaming business. The company also is a 5% equity owner of FanDuel Group.