Boyd Gaming Could Offer $9 Billion to Acquire Penn Entertainment

On Thursday, Reuters reported that Boyd Gaming could be considering an acquisition of Penn Entertainment, The Las Vegas-based company values Penn at more than $9 billion, including debt. This rumor first appeared nine days after Boyd Gaming appointed Michael Hartmeier to their board of directors. Increasing the speculation that Boyd could be trying to make an offer to Penn. Hartmeier previously worked with Penn CFO Felicia Hendrix at Lehman Brothers. 

Three weeks ago, the Donerail Group sent a letter to Penn’s board of directors. They encouraged Penn to sell itself following a series of costly missteps. No public comments have been made by Penn or Boyd regarding the matter.

What does Boyd need to happen to be able to acquire Penn?

The largest transaction in casino history happened when Eldorado Resorts paid $17.3 billion to acquire Caesars Entertainment in 2020. According to unnamed sources, Boyd Gaming could offer $9 billion to acquire Penn Entertainment. Boyd’s enterprise is valued at around $7.8 billion. Implying they might need to head capital markets by issuing debt or equity to make a deal happen. On top of that, Boyd could face regulatory hurdles because they operate in many of the same states as Penn. They include Illinois, Kansas, Louisiana, Nevada, and Pennsylvania. Would there be a competition issue between the two? 

Additionally, Boyd could run into the issue of property ownership. Almost all of Penn’s casinos are land owned by Gaming and Leisure Properties (GLPI). That would give them some say in the potential sale of Penn to Boyd Gaming. While Boyd has a relationship with GLPI, their long-standing preference is to own the land on which their gaming venues reside. Another issue that Boyd needs to resolve if they want to acquire Penn.

What is the future of ESPN Bet if Boyd acquires Penn?

In August 2023, Penn Entertainment paid the Walt Disney Company $1.5 billion in stock over the next 10 years. That gave them the right to use the network’s name on their mobile betting app. The Walt Disney Company would then have some say in Boyd trying to acquire Penn. One major issue is that Boyd owns 5% of FanDuel. How would they make a deal work if Penn is run by ESPN Bet? Boyd claims they could continue to enjoy their relationship with FaDuel while having passive investment in the company.