Boyd Gaming executives have finally addressed rumors of a multi-billion dollar acquisition of PENN Entertainment.
Boyd CEO Kevin Smith responded to a report from Reuters during the company’s Q2 earnings call this week. The report detailed Boyd’s interest in acquiring PENN Entertainment. The deal, which could be worth more than $10 billion, would be the largest merger in the gambling industry since Eldorado Resorts acquired Caesars Entertainment for $17.3 billion in 2020.
“If you look back over the history of our company, the majority of our growth obviously has come through M&A,” said Smith during Thursday’s earnings call. “I think we’ve developed a great expertise at it. We know how to buy properties and companies right, and we know how to extract value out of these companies once they’re part of our portfolio.”
The PENN acquisition will be challenging for Boyd due to financial and regulatory hurdles.
As of July 2024, Boyd has a market cap of $5.8 billion, and would need to raise additional capital to complete the PENN deal. Additionally, both Boyd and PENN would need to obtain regulatory approval in all markets where they operate.
PENN would also need approval from The Walt Disney Company due to their partnership with ESPN to operate ESPN Bet.
“In terms of how we may finance a particular transaction, it’s totally dependent on the specific facts and circumstances around the transaction,” continued Smith. “And so, it’s hard to speculate on how we might do that.”
Last year, PENN entered into a licensing agreement with ESPN that saw Barstool Sportsbook rebranded as ESPN Bet. As part of the deal, PENN paid ESPN $1.5 billion in cash to launch the brand. In addition, ESPN was given the option to purchase 31.8 million shares of PENN stock with $500 million in warrants.
The partnership between PENN and ESPN has an initial term of 10 years. In 2021, PENN also expanded its presence in Canada by acquiring Toronto-based Score Media Gaming for $2.1 billion. The company offers betting through theScore Bet platform.
Boyd is eyeing a PENN acquisition as ESPN Bet’s market share declines following its November 2023 launch. According to JMP Securities, ESPN Bet’s market share in licensed jurisdictions was 3.2% in Q2 2024, up from 4.7% in Q1 2024.
Boyd reported revenue of $967.5 million in Q2 2024, up from $917 million in the same period last year. The Nevada-based company, which operates 28 properties in 10 states, posted net income of $139.8 million in Q2 2024, up from $192.5 million in Q2 2023.
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