Penn National Purchases theScore from Score Media for $2B
Penn National Gaming Inc. has hit another milestone as it sets about acquiring Score Media and Gaming Inc., a Canadian-based sports gambling news outlet. The deal will see about $2 billion exchange hands in both cash and stock. It is a significant move that will allow Penn to add sports news to its chain of operations. (Market Watch, 2021)
Penn National offers online gaming, sports betting, and live racing in 20 states in the U.S, making it one of the biggest casino operators. In 2019, it acquired a 4.5% share in theScore, giving theScore access to sports enthusiasts in the states where Penn operates.
Score Media owns and operates theScore mobile app, one of North America’s most prominent sports news apps, delivering authentic sports news to an active audience of approximately four million users a month. One of their other products is ScoreBet, a sports betting app already operating in four states in the US. (The Globe and Mail, 2021).
This deal will see Penn National Gaming expand its territory to North America, leveraging Score Media’s influence in Canada. It also allows theScore to enter into the US market, in the season where many states are legalizing online sports betting.
Jay Snowden, CEO at Penn National, had this to say, “We are thrilled to be acquiring theScore, which is the number one sports app in Canada and the third most popular sports app in all of North America. theScore’s unique media platform and modern, state-of-the-art technology is a powerful complement to the reach of Barstool Sports and its popular personalities and content. We’re really focused on building relationships and creating content and loyalty long-term. theScore knows how to do that”.
This deal comes at a time the Canadian government legalized single-game betting, which is expected to be implemented by the end of 2021.
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Implications of the Deal for Shareholders
The agreement will benefit stakeholders at Score Media, as they will receive 0.24 shares and US$17 in cash for each theScore share, potentially driving the price to US$34 per theScore share. This is based on Penn’s average trading price as of 30 July 2021. (Business Wire, 2021).
The transaction will transfer 93% control of the total shares of theScore to Penn National shareholders, leaving 3% for the stakeholders at theScore.The slated timeline for the completion of the purchase is the 1st quarter of 2022. Penn National will settle the cash expectation clause on the deal from its balance sheet.
Terms of the Deal
As part of terms of the deal, theScore will remain untouched in its branding and retain its headquarters in Ontario, Canada. John Levy and Benjie Levy, the founders and Chief Executive Officer, respectively, will continue as company heads.
Chairman and Chief Executive Officer of theScore, John Levy, said in his statement, “This deal brings together two companies that share a vision for how media and casino gaming intersect, and we could not be more excited to join the Penn National family. I’m proud of theScore team and all of our accomplishments and believe the time is right to take the next step and align with a company in Penn National with the resources and scale to accelerate our business. We are excited to join forces with Penn to form the most powerful media and gaming company in North America.”
Projections for Penn National
As a result of the announcement, Penn shares shot up by 9% to close at US$72.26, while theScore rose by over 80% to close at US$32.64, both on NASDAQ.
It is expected that post-acquisition, profits will climb by US$200m in EBITDA. The deal’s price, which currently poses as a loss on Penn’s spreadsheet, can profit the company by 2025. Analysts predict that theScore can grow to US$5.1b by the year 2025, based on the huge potentials of the North American market. (CNBC,2021).
Sources:
- Business Wire, 2021
https://www.businesswire.com/news/home/20210805005365/en/Penn-National-Gaming-to-Acquire-Score-Media-and-Gaming-Creating-North-America%E2%80%99s-Leading-Digital-Sports-Content-Gaming-and-Technology-Company - CNBC, 2021
https://www.cnbc.com/amp/2021/08/05/penn-national-acquires-thescore-for-2-billion.html - Market Watch, 2021
https://www.marketwatch.com/story/penn-national-gaming-to-acquire-thescore-from-score-media-for-about-20-billion-in-cash-and-stock-2021-08-05 - The Globe and Mail, 2021
https://www.theglobeandmail.com/business/article-penn-national-gaming-to-acquire-score-media-in-us2-billion-deal/