Shares of Penn Leisure (NASDAQ: PENN) traded increased Tuesday after rival Boyd Gaming (NYSE: BYD) introduced a board appointment that stoked hypothesis it may very well be mulling an acquisition of the rival regional on line casino operator.
Boyd Gaming’s Orleans Lodge & On line casino. The corporate’s latest board appointment is stirring hypothesis a couple of takeover of rival Penn Leisure. (Picture: YouTube)
Late Monday, Boyd mentioned it added Michael Hartmeier to its board of administrators. He beforehand served as the previous group head of lodging, gaming and leisure funding banking for Barclays. Previous to that, he served in related capacities at Lehman Brothers and Credit score Suisse First Boston.
Throughout his 25-year profession in funding banking, Hartmeier accomplished greater than $125 billion in financing and advisory assignments, together with work for quite a few gaming firms,” based on an announcement issued by Las Vegas-based Boyd.
Hartmeier has gaming business director expertise as he was beforehand a member of the board at Full Home Resorts (NASDAQ: FLL), additionally a regional on line casino operator.
Start of Boyd/Penn Rumor
In late Could, Penn investor the Donerail Group authored a scathing letter to the board, saying the corporate has frittered away billions of {dollars} on on-line sports activities betting with nothing to indicate for it whereas encouraging the operator to mull a sale.
Donerail believes that whereas sports activities betting missteps have plagued Penn shares, the corporate nonetheless controls a treasure trove of regional on line casino belongings that would fetch no less than double the operator’s market capitalization in an acquisition. Whereas some sell-side analysts doubt Penn will likely be acquired, Boyd has been floated as a logical suitor for the corporate.
In a be aware to shoppers at this time, Gordon Haskett analyst Don Bilson mentioned Boyd may very well be evaluating all or elements of Penn. Neither firm has commented to that impact. It’s doable that Penn has some items that may very well be enticing Boyd, however on a regional foundation, particularly within the Midwest and the South, there’s vital present overlap between the 2 operators.
In sports activities wagering, Boyd runs its personal cellular software and retail sportsbooks in Nevada and controls 5% of FanDuel, partnering with that firm in different states. That may very well be an indication that even Boyd needs to maneuver on Penn, the potential suitor won’t be keen on ESPN Wager.
Boyd/Penn Connections
Relating to Boyd probably courting Penn, there’s an attention-grabbing connection. Penn CFO Felicia Hendrix was a managing director at Barclays for 12.5 years and her time there overlapped with that of Hartmeier. Previous to that, she spent 10.5 years at Lehman Brothers and a few of her time there intersected with Hartmeier’s tenure on the funding financial institution.
That could be not more than an attention-grabbing footnote or it may show to be a relationship that may very well be helpful in takeover talks, ought to these discussions emerge.
As for monetary heft, Boyd has a market capitalization of $4.97 billion at this writing in comparison with $2.58 billion for Penn, indicating the previous may possess the firepower wanted to make a transfer on the latter. Nonetheless, when factoring a premium for a goal, Boyd may have to subject debt or fairness ought to it resolve to make a proposal for Penn in its entirety.
