Penn National announces plans to buy the company for $2 billion
Shares of theScore close up 79% after Penn National announces plans to buy the company for $2 billion
Aug 8 2021
Key points
Strong momemum stock with legistatve change both in Canada and US
Expansion and growth play and a great pureplay in gaming , Pen stock is up 58% YTD
Strong push to continue to be an industry leader in this space
The News
Source: The Nasdaq
Shares of theScore close up 79% after Penn National announces plans to buy the company for $2 billion. The acquisition of Score Media and Gaming adds to Penn National's holdings in sports media after it bought a 36 per cent stake in Barstool Sports Inc. in 2020.
The companies
Penn National Gaming Inc.
Penn is the nation's largest and most diversified regional gaming company. It has 41 properties across 19 states. Penn operates under brands that include Hollywood, Ameristar and L'Auberge. Penn Interactive operates retail sports betting across the company's portfolio, as well as online social casino, bingo and iCasino products. (wiki)
theScore
TheScore transitioned into its role as a digital-based outlet in 2012 when it sold its broadcast business to Rogers Communications for $167 million. It built a sports gaming and media division and attempted to leverage its mobile app user base into a competitive sports betting business. The company launched theScore Bet app for mobile wagers in 2019, and this year made its debut on the Nasdaq. Today TheScore app is the number one sports app in Canada and the third most popular sports app in all of North America.
Canada market
Score Media and Gaming estimates its home market can grow to $5.4 billion, and the Ontario market alone could reach $2.1 billion by 2025. According to Bloomberg, Canadians place over $7 billion in illegal wagers since sporting gambling in the country is mainly limited to horse racing.
TheScore, founded in 2012 by the company’s current CEO, John S. Levy. It hosts roughly four million active users per month, and has expanded from a fledgling news and statistics hub to a space where users can place bets on games using ScoreBet, a feature developed in 2019 and currently available in four U.S. states
The merger comes as Canada moves to legalize single-event sports betting across the country, prompting a flurry of activity from ambitious startups to cash in on the burgeoning industry.
In June, Ottawa passed Bill C-218, the Safe and Regulated Sports Betting Act, which gives authority to the provinces to license and regulate sports betting. Sports bets in Canada currently have to include at least two events in a single wager — what’s known as parlay betting. Under the new rules, however, bettors will be allowed to put money down on single events.
The Alcohol and Gaming Commission of Ontario says it expects there to be an internet gaming market in the province by the end of the year.
The Deal
The high multiple of about 120 times earnings for Penn National shares shows that investors still believe the company will be successful in mobile betting, Loop Capital Markets analyst Daniel Adam told Bloomberg News on Wednesday.
Penn National said Score Media and Gaming shareholders will receive $17 in cash and 0.2398 shares of its common stock for each theScore share, bringing the total share price to $34.00. Penn National estimates the acquisition will provide adjusted EBITDA growth in two years, an incremental $200 million medium-term adjusted EBITDA, and $500 million of incremental long-term adjusted EBITDA upside.
source: cnbc
The stock
source: Google Finance
Is Penn Stock A Buy Now?
The market for online gambling is growing with strong revenue stream for Penn, but investor’s caution should be kept in mind. Two of the Big Four states still do not allow sports betting. New York and Michigan recently passed laws allowing sports wagering, but California and Florida have not. As a leader in the booming sports betting market, investors consider the aggressive push by Penn and it’s strategic efforts to continue to be so.