US casino powerhouse Boyd Gaming has reportedly approached fellow casino giant Penn Entertainment with an acquisition proposal. People familiar with the matter told Reuters that this could be the biggest casino merger in the US since Eldorado Resorts $17.3 billion acquisition of Caesars Entertainment.
Following Reuters’ report, Penn’s shares experienced an increase of 8% to $19.89 while Boyd’s stock fell 3% to $51.90.
For context, Penn Entertainment currently has a market value of over $9 billion, including debt, experts told the news outlet. Boyd Gaming is a smaller company, boasting a market value of $7.8 million including debt.
Reuters believes that this could be an uphill battle for Boyd, which would need significant resources to complete such an arrangement. Additionally, should both companies agree to go with the deal, they would need to secure approval from US regulators and officials in multiple states.
To make matters even more difficult for Boyd, the company would also need to convince Walt Disney to agree to the agreement, considering its ESPN Bet collaboration with Penn.
According to Reuters, the future of the deal is still very uncertain and there is no indication that Penn will engage in negotiations. The news outlet reached out to Penn, which refused to comment. Boyd and Disney, on the other hand, did not respond to queries.
Investors Asked Penn to Explore a Sale
Boyd’s interest in Penn comes in the wake of the early success of ESPN Bet, a joint venture operated by Penn and ESPN. Under its agreement with ESPN, the operator has rights to run the brand for 10 years. The Disney-owned media giant, on the other hand, was granted the rights worth $500 million to purchase Penn stock.
Penn started building up the ESPN Bet brand after divesting Barstool Sports and cutting its ties to the sportsbook’s controversial founder Dave Portnoy. While ESPN Bet is yet to command a market share comparable to that of FanDuel or DraftKings, the brand’s initial success has sparked optimism about its future potential.
Boyd’s interest in Penn also comes amid investor critiques of Penn’s heavy spending on digital businesses that may not yield strong returns. Such entities have also urged Penn Entertainment to explore a sale, although a recent Truist Securities report suggests that this may not be Penn’s intention.
In any case, the recent investor activity might mean that Penn could at least consider Boyd’s alleged offer.