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Penn National Gaming to Acquire Score Media for $2 Billion
By Jeff Osienya Aug 09, 2021 IndustryIn a bid to bite a bigger chunk of the North American gaming market and bring gaming technology in-house, Penn National Gaming is buying out Score Media and Gaming for $2 billion in cash and equity.Penn National Gaming, a renowned operator of some of the biggest casinos and racetracks in the US, announced that it has penned a buyout deal with Score Media and Gaming. Pennsylvania-based Penn National announced the acquisition agreement last Thursday, estimated to cost a total of about $2.0 billion in cash and stock. Score Media and Gaming is a Toronto-based digital media company known for its sports betting platform, theScore – Canada’s most-downloaded sports app.
Per the agreement terms, for each Score Media share, shareholders are set to receive $17 in cash and 0.2398 Penn National common stake shares. This translates to $34.00 for each share of Score Media. The figure is based on calculations of the volume-weighted average of Penn National’s trading price in the 5 days leasing to July 30th, 2021. Both companies have unanimously approved the transaction via their boards of directors. And so, the deal is expected to close in Q1 2022.
When the transaction is completed next year, the current shareholders of Score Media and Penn National will hold about 7% and 93%, respectively, of the outstanding shares of the expanded company. As part of the arrangement, Penn National plans to spend roughly $1 billion from its current balance sheet to pay for the cash consideration in the acquisition arrangement.
Upon the buyout announcement, Chairman and Chief Executive Officer of Score Media, John Levy, shared a few sentiments saying:
Quote“This deal brings together two companies that share a vision for how media and 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.”
A Bullseye Shot at a Bigger Share of the North American Market
Through this deal, Penn National seizes a much-anticipated opportunity to grow its footprint in the North American market. Mind you, legislators in Canada also recently passed a new bill, C-218, to lift the federal blanket ban on single-event sports wagering. While there’s no news of the official date that the law will take effect, the law has already received all the required approvals. Initially, sports betting in Canada was only limited to parlay bets. So, Penn National is slated to strike gold in Canada as it’s expected to grow exponentially soon.
As it zeroes in on the larger North American market, Penn National has also been working to cement its US presence. Penn spent $163 million to purchase a 26% stake in Barstool Sports in January 2020 and spun off the Barstool Sportsbook from a company that initially focused on sports media publishing. Right now, the Barstool Sports subsidiary offers a sportsbook app in Pennsylvania, Illinois, and Michigan. With the buyout of Score Media, Penn National is now presented with a robust opportunity for leveraging theScore and its Barstool Sportsbook platform to grab a bigger slice of the North American sports betting market.
Following the Score Media acquisition announcement, Penn National’s President and CEO, Jay Snowden, said:
Quote“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.”
It’s worth pointing out that only a third come from the Canadian market of the 4 million users that theScore currently commands. The remaining two-thirds come from the US, specifically New Jersey, Iowa, Indiana, and Colorado. And according to recent data, theScore users, on average, spend nearly two hours on the app every month. So, integrating theScore with Barstool will certainly churn out a formidable iGaming platform that will certainly shake up the North American market. Snowden added that:
Quote“We are now uniquely positioned to seamlessly serve our customers with the most powerful ecosystem of sports, gaming, and media in North America, ultimately creating a community that doesn’t currently exist. Users will enjoy a unique mobile sports betting and iCasino platform with highly customized bets and enhanced in-gaming wagering opportunities, along with highly engaging, personalized sports and entertainment content and real-time scores and stats. We believe this powerful new flywheel will result in best-in-class engagement and retention.”
Strategic Acquisition to Move Technology Development In-House
Penn’s buyout of Score Media and Gaming further underscores the vertical integration trend that online casino and sports betting brands have recently adopted to move technology development in-house. Besides significantly cutting down costs, in-house technology development also fosters better control over product development, thereby enhancing customer experience. On that matter, Snowden said:
Quote“Importantly, the transaction provides us with a path to full control of our own tech stack. theScore has developed a state-of-the-art player account management system and is finalizing the development of an in-house managed risk and trading service platform. This should lead to significant savings in third-party platform costs and allow us to broaden our product offerings – providing the missing piece for operating at what we expect to be industry-leading margins. In addition to the synergies, we’ll be gaining access to theScore’s deep pool of product and engineering talent and data-driven user analytics, which will help drive our customer acquisition, engagement, retention strategies, and cash flows.”
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