Gambling operator Boyd Gaming has approached competitor Penn Entertainment to discuss a potential acquisition, sources told Reuters. Boyd owns and operates 28 gambling properties across 10 U.S. states, including casinos, racinos, and non-gaming properties. It also has a minority stake (5%) in sports betting and iGaming operator FanDuel.
Penn Entertainment operates more than 40 properties across 20 U.S. states, including its marquee Hollywood Casino brand. The company also inked a 10-year partnership with Disney last year to operate its ESPN BET sportsbook brand, a deal estimated at $1.5 billion.
There are several hurdles to overcome on the way to a possible acquisition, the first being Boyd’s market value of $7.8 billion compared to Penn’s $9 billion. Both companies’ debt structure will require Boyd Gaming to borrow extensively in order to complete a purchase.
Another potential obstacle is Disney’s involvement as a stakeholder in Penn Entertainment because of the ESPN BET partnership, which will require it to agree to the acquisition. And lastly, there are expected challenges from regulators in the states where both companies currently operate.
While there is interest from Boyd Gaming, Penn Entertainment sources say there is no certainty that the company will entertain takeover talks.
“We don’t think any sort of formal strategic review at Penn is likely in the near-term with a clear ESPN BET product roadmap; football season on the horizon; and higher/volatile interest rates still impacting overall M&A for now,” wrote Truist Securities analyst prior to Boyd Gaming’s intentions becoming public.
