Penn National to Buy Score for $1.74 Billion in Betting Push

(Bloomberg) -- Barstool Sports backer Penn National Gaming Inc. agreed to buy Score Media & Gaming Inc. for about $1.74 billion in cash and stock, moving to expand in the fast-growing North American sports-betting market.

Toronto-based Score Media’s app, called theScore, is the top sports app in Canada and No. 3 in North America, Penn National said in a statement Thursday. The companies have had a strategic partnership since 2019.

“There’s so much that theScore does that is so complementary with what Penn does and Barstool does,” Penn National Chief Executive Officer Jay Snowden said in an interview. “You put it all together and there’s so much synergy for the future in terms of revenue growth.”

Score shareholders will receive $17 in cash and 0.2398 of a Penn National share for each Score share, or $32.88 a share based on Wednesday’s close -- an 81% premium to that day’s closing price for Score’s U.S.-listed shares. The companies valued the deal at about $2 billion.

Score surged as much as 83% to $33.16 in New York, the most intraday since May 2018, when the U.S. Supreme Court lifted a ban on sports betting outside of Nevada. Penn National rose as much as 11% to $73.43, the most since January.

Penn National, which bought a 36% stake in Dave Portnoy’s Barstool Sports in January 2020, has seen its stock fizzle in recent months amid a dearth of sporting events and as the company struggled to gain market share for its mobile gambling offerings in closely watched states like Pennsylvania and Michigan.

The high multiple of about 120 times earnings for Penn National shares shows that investors still believe the company will be successful in mobile betting, Loop Capital Markets analyst Daniel Adam told Bloomberg News on Wednesday. The Score deal is part of the Wyomissing, Pennsylvania-based company’s effort to make that happen.

What Bloomberg Intelligence Says:

“The impending acquisition of Score Media & Gaming for $2 billion gives Penn critical access to Canada, which recently legalized single-game sports bets.”

-- Brian Egger, Gaming & Lodging analyst

Click here to read the research.

Score Media had its roots in television with a cable channel that was also called the Score and showed a range of highlights and events.

But the network perpetually trailed two established Canadian sports networks and Chief Executive Officer John Levy, who controls the company, opted to bet the future on digital assets. He sold the TV license and related assets in 2012 to focus on a sports website and app, then pivoted to sports betting.

“We have this humongous opportunity, not just south of the border where we’re operating in four states, but in Canada where it’s a different ballgame for us,” Levy said in an interview. “This is our home turf, this is where we’re born, this is where everybody knows us and everybody uses the app.”

Score’s Toronto-listed shares doubled in price last year as the Canadian government moved to liberalize the rules around gambling, allowing bets on single sports events for the first time. Score took advantage to list the company in the U.S. in February.

“We’re not building this as a shiny new object just to hold it out there to say, come and get me,” Levy said in a January interview. He said the company would look at any offers.

Goldman Sachs and Code Advisors are providing financial advice to Penn National, with Wachtell, Lipton, Rosen & Katz and Blake, Cassels & Graydon serving as legal counsel. Score is getting financial advice from Morgan Stanley and Canaccord Genuity Group, and legal services from Paul, Weiss, Rifkind, Wharton & Garrison and McCarthy Tétrault. Greenhill & Co. Canada Ltd. is an independent financial adviser to Score’s board.

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