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The Penn National Gaming logo displayed on a smartphone.
Rafael Henrique | SOPA Pictures | LightRocket | Getty Images
Shares of Score Media and Gaming, which operates theScore, rose more than 60% Thursday morning after Penn National announced the acquisition of the company for $ 2 billion in cash and stock options. Penn National shares fell 2% after the markets opened.
The deal increases Penn National’s reach in North America, as Score Media and Gaming has positioned itself to take advantage of the Canadian mobile sports betting market.
Penn National said shareholders of Score Media and Gaming will receive $ 17 in cash and 0.2398 common shares for each theScore share, bringing the total share price to $ 34.00. Penn National estimates that the acquisition will provide two-year Adjusted EBITDA growth, additional Mid-Term Adjusted EBITDA of $ 200 million and Long-Term Adjusted EBITDA increase of $ 500 million.
Goldman Sachs and Morgan Stanley served as advisers in the transaction.
Penn National also supports the Barstool Sports app, which it bought in 2020 for $ 450 million. In a statement, Penn National CEO Jay Snowden said the acquisition of TheScore allows the company to get the company’s internal technology. This “should lead to significant savings on third-party platform costs and allow us to expand our product offering – providing the missing part to operate at what we believe are the best margins in the industry.”
“In addition to synergies, we will have access to theScore’s vast pipeline of product and engineering talent and data-driven user analytics, which will help us drive our customer acquisition, engagement strategies. , retention and cash flow, ”he added.
TheScore transitioned to its role as a digital point of sale in 2012 when it sold its broadcast business to Rogers Communications for $ 167 million. It created a sports and media games division and tried to leverage its mobile app user base into a competitive sports betting business. The company launched TheScore Bet app for mobile betting in 2019 and debuted this year on Nasdaq.
Score media and Gaming rings the opening bell on Nasdaq on March 16, 2021.
The Nasdaq
Discussing the future of theScore last March, Chris Lencheski, chairman of private equity consultancy Phenicia Lencheski, warned that the dollar average to acquire a new client would start to weigh on companies with little capital. and would result in acquisitions and mergers within 24 to 48 months.
Score Media and Gaming estimates that its domestic market could reach $ 5.4 billion, and that the Ontario market alone could reach $ 2.1 billion by 2025. According to Bloomberg, Canadians invest more than $ 7 billion. dollars in illegal betting, as sports betting in the country is largely confined to horse racing. .
Penn National released its second quarter 2021 earnings report Thursday morning, reporting $ 1.5 billion in quarterly revenue.
Snowden is scheduled to appear on CNBC’s “Halftime” on Thursday.
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