M&A News: Penn Entertainment (NASDAQ:PENN) Surges amid Potential Merger – TipRanks.com

Shares of casino operator Penn Entertainment (NASDAQ:PENN) surged almost 10% in today’s trading amid news that rival Boyd Gaming (NYSE:BYD) is looking to merge with it, according to Reuters. This move could create a gambling giant with a market value of over $8 billion when excluding debt. If successful, this deal would be the largest in the U.S. gambling sector since Eldorado Resorts acquired Caesars Entertainment (NASDAQ:CZR) in 2020.

The potential merger faces challenges, as Boyd would need substantial financial backing to complete the deal. Additionally, regulatory approvals across multiple states, along with key partners, including Disney (which has a partnership with Penn through ESPN), are necessary. In fact, Penn has a $1.5 billion licensing deal with Disney to use the ESPN brand for its online sportsbook. There’s also no certainty that Penn will engage in negotiations.

Therefore, the market is mostly trading on potential negotiations rather than an actual offer from Boyd, which investors should keep in mind before jumping into a PENN trade. This is especially true since PENN stock has struggled in 2024, as it’s down 23% on a year-to-date basis. If nothing happens, it’s likely that the negative momentum will continue unless another catalyst comes up.

Which Gambling Stock Is Better?

Out of the aforementioned firms, Wall Street analysts believe that BYD stock is the best gambling stock to Buy. In fact, they expect the price to increase by 36.47% from current levels to $71.89 per share, as pictured below. Interestingly, professional money managers seem to agree, as BYD stock is the only one out of the two with a Positive Hedge Fund Signal.