Boyd Gaming executives are finally addressing rumors of a potential multi-billion dollar purchase of PENN Entertainment.
Boyd CEO Kevin Smith responded during the company’s Q2 earnings call this week to a Reuters report that details Boyd’s interest in acquiring PENN Entertainment. The deal, which could fetch more than $10 billion, would be the gambling industry’s largest merger since Eldorado Resorts acquired Caesars Entertainment in 2020 for $17.3 billion.
“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.”
A deal for PENN faces an uphill battle for Boyd due to financial and regulatory hurdles.
As of July 2024, Boyd holds a market capitalization of $5.8 billion and would need an influx of capital to secure a deal for PENN. Boyd, along with PENN, would also need regulatory approval in markets where they both operate. PENN would also need to garner approval from The Walt Disney Company due to its 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 agreed to a licensing deal with ESPN to rebrand Barstool Sportsbook as ESPN Bet. The deal saw PENN pay ESPN $1.5 billion in cash to launch the brand. It also allows ESPN to purchase 31.8 million shares of PENN stock with $500 million of warrants.
The partnership between PENN and ESPN has an initial 10-year term. PENN has also established a presence in Canada through its purchase of Toronto-based Score Media Gaming in 2021 for $2.1 billion. The company offers wagering through theScore Bet.
Boyd is considering an acquisition of PENN as ESPN Bet’s market share dwindles following its November 2023 launch. According to data provided by JMP Securities, ESPN Bet held a 3.2% market share in licensed jurisdictions in Q2 2024, down from 4.7% in Q1 2024.
Boyd reported $967.5 million in revenue in Q2 2024, up from $917 million for the same period last year. The Nevada-based company, which operates 28 properties in 10 states, posted a net income of $139.8 million in Q2 2024, down from $192.5 million in Q2 2023.
