Boyd Gaming Interested in Purchasing Penn Entertainment

Boyd Gaming Corporation has reportedly approached Penn Entertainment with an acquisition offer, as per an exclusive report by Reuters. However, the deal isn't likely to impress Penn's board.

The Penn Entertainment-operated M Resort Spa and Casino in Henderson, NV. (Source: Penn Entertainment)

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Penn, known for its portfolio of gaming and racing properties, holds a market value exceeding $9 billion, including debt. On the other hand, Boyd Gaming, with a market value of $7.8 billion, including debt, would require substantial financing to pursue the acquisition successfully.

Details about the specific assets and properties involved in the potential acquisition remain undisclosed. However, there are several other obstacles, in addition to the financing concerns, that stand in the way.

In order to complete any transaction, Boyd must also consider the relationship between Penn Entertainment and The Walt Disney Company. Disney's sports network, ESPN, has an existing partnership with Penn, which could be a decisive factor in the acquisition process.

Convincing Disney could prove to be a complex challenge for Boyd, necessitating strategic negotiations to align the interests of all parties involved. Regulatory hurdles also loom large, as approvals from multiple states where both companies operate casinos and racetracks would be necessary

The acquisition, if successful, would be a significant consolidation within the US gambling industry. It would potentially rival Eldorado Resorts' $17.3 billion purchase of Caesars Entertainment in 2020, according to Reuters.

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Sale Not Likely

Amidst these developments, activist investors have voiced their concerns regarding Penn's investment strategy. Groups like Donerail Group have been openly critical of Penn's multi-billion-dollar expenditure on its digital business, questioning the lack of strong return prospects. These investors have been urging the Pennsylvania-based company to consider a sale, suggesting that a new direction could potentially enhance shareholder value.

Both Boyd Gaming and Penn Entertainment have maintained a silence on the potential Boyd. However, Penn's board has recently made it clear that it isn't looking to sell the company. This statement adds another layer of complexity to the situation, indicating that any potential acquisition would not only require financial acumen but also a convincing proposition that aligns with Penn's strategic goals and vision for the future.

A combined Boyd and Penn would hold a vast portfolio encompassing casinos and racetracks across 30 states, potentially rivaling industry giants like Caesars Entertainment. The deal's ultimate fate hinges on Boyd's ability to secure financing, win regulatory and partner approvals, and potentially convince Penn's board to deviate from its current stance.


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