PENN Entertainment shares jump 10% following reported M&A interest from Boyd Gaming
Reuters suggest Boyd could make a move for the operator behind ESPN Bet and Hollywood Casino as market reacts positively to possible acquisition
PENN Entertainment’s share price spiked almost 10% by close of trading yesterday, 20 June, after reports emerged that Boyd Gaming was set to launch an acquisition approach for the firm.
Reuters reported that Boyd had approached the ESPN Bet firm, with PENN’s stock leaping 9.9% to $20.04 (£15.84) in New York by the end of the day.
The share price spike leaves the business with a market cap of $3.06bn.
However, the report did send Boyd’s stock slipping, down 2%, to $52.86. The Las Vegas-based firm boasts a market cap of around $5bn, at the time of writing.
The Reuters report suggested PENN’s total market value tops $9bn when including debt, while Boyd is less at around $7.8bn.
Any acquisition would also require the approval of regulators and officials in several states before progressing.
Reports of potential talks come three weeks after the Donerail Group, an investor in PENN, published an open letter slamming the business’ recent strategy.
The six-page letter, which was signed by Donerail Group managing partner Will Wyatt, claimed the group’s online strategy had “destroyed” shareholder value In the Wyomissing, Pennsylvania-based firm.
Wyatt’s letter also took aim at PENN’s M&A strategy, which included buying theScore for more than $2bn and ploughing almost $450m across two tranches to acquire Barstool Sports.
Barstool was eventually sold back to its founder Dave Portnoy for $1 as PENN secured a $1.5bn licensing deal with the Walt Disney Company to launch ESPN Bet.
Wyatt became the latest investor to air his grievances in public after investment firm HG Vora said the business was in a state of “persistent underperformance” earlier this year.
He also suggested the carving out of PENN’s land-based casino empire as a true value driver.
To that effect, the opinion website Nevada Independent has reported that PENN is looking to sell the M Resort in Henderson, Nevada.
Earlier this month, PENN shareholders revolted over CEO Jay Snowden’s pay packet at the company’s AGM.
More than a third of stockholders voted against Snowden and CFO Felicia Hendrix’s total remuneration for 2023.
Snowden’s total pay of $15.5m saw his $1.8m base salary topped up with various stock awards and incentives while Hendrix will be awarded $4m in compensation.
PENN chair David Handler also saw 27% of shareholders push back against his re-election to the board in what turned out to be a tumultuous meeting.
Boyd added former Barclays head Michael Hartmeier to its board earlier this month, which raised eyebrows given his banking and financial industry background.