Boyd Gaming is considering acquiring Penn Entertainment

Gaming operator Boyd Gaming has approached competitor Penn Entertainment to discuss a potential acquisition, sources told Reuters. Boyd owns and operates 28 gaming properties in 10 U.S. states, including casinos, gaming clubs 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 in 20 U.S. states, including the Hollywood Casino brand. Last year, the company also signed a 10-year partnership with Disney to operate its sports betting brand, ESPN BET, worth an estimated $1.5 billion.

There are several hurdles to overcome on the way to a possible takeover. The first is Boyd’s market value of $7.8 billion compared to Penn’s $9 billion. The debt structure of both companies will require Boyd Gaming to borrow heavily to complete the purchase.

Another potential hurdle is Disney’s involvement as a shareholder in Penn Entertainment due to the ESPN BET partnership, which will require Disney’s approval of the acquisition. Finally, challenges are expected from regulators in the states where both companies currently operate.

While Boyd Gaming has expressed interest, Penn Entertainment sources say there is no certainty the company will engage in acquisition talks.

“We do not believe any formal strategic review at Penn is likely in the near future with a clear roadmap for the ESPN BET product; football season on the horizon; and higher/floating interest rates continue to impact overall M&A for now,” a Truist Securities analyst wrote before Boyd Gaming’s intentions became public.

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