Flutter Reportedly Interested In Deal With Boyd Gaming To Buy PENN Interactive

Erik Gibbs

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Flutter Entertainment, the global gaming company and owner of FanDuel, is reportedly showing interest in partnering with Boyd Gaming to bid for PENN Interactive’s assets.

TheDeal.com, as reported by Seeking Alpha, broke the news that Flutter may be talking to Boyd about trying to put a collaborative deal together. Neither Flutter nor Boyd has made a public statement yet about any negotiations.

Acquisition rumors surrounding PENN first emerged in late May when the Donerail Group, an activist investor, sent a letter to PENN’s board. The letter highlighted an 80% decline in PENN’s stock value over the past three years, suggesting that strategic changes were necessary to reverse this downward trend. This critique prompted further examination of PENN’s market position and potential future moves.

In June, Truist Securities added to the discussion by releasing an analysis that deemed PENN’s stock to be undervalued. The report set a target share price for PENN between $23 and $25, a range the stock had last seen in February. This valuation suggested room for growth and attracted attention from potential buyers and strategic partners who saw an opportunity in acquiring PENN’s assets at a perceived discount.

Around the same time, Reuters reported that Boyd had extended a takeover bid for PENN valued at more than $9 billion. However, despite the substantial offer, several investment banks expressed skepticism about PENN’s willingness to engage in the deal.

Analysts pointed out numerous hurdles that could complicate the acquisition process. Among these are regulatory challenges, integration issues, and strategic alignment between the companies as they try to work through licensing situations in different states.

Stock markets respond to news

Flutter’s potential involvement in the bid for PENN Interactive adds another layer of complexity to the unfolding scenario. The inclusion of ESPN Bet, a collaboration between PENN and ESPN, makes the deal more attractive. For Flutter, acquiring these assets would bolster its market position and expand its footprint in the highly competitive U.S. digital gaming landscape.

Just the rumor of a possible deal with Flutter sent stocks flying. On July 3, PENN’s stock on NASDAQ was trading at $8.74, but jumped to $19.59 on the afternoon of July 5.

NYSE’s Flutter, which just added two financial industry veterans to its board, was at $192.47 on the morning of July 3. It moved up to $197.58 by 3 p.m. on July 5, although it closed at $195.16.

Only Boyd, another NYSE stock, hasn’t seen an uptick. It was at $54.66 on July 3 before settling at $54.05 on July 5.

The upcoming earnings reports from Boyd, PENN, and Flutter are likely to provide further insights into the feasibility and strategic direction of the potential acquisition. Boyd is set to release its second-quarter earnings on July 25, followed by PENN on August 8 and Flutter on August 13.

Particularly significant will be PENN’s earnings call, which will offer updates on the performance and strategic initiatives of ESPN Bet. The success and future plans for ESPN Bet could significantly influence PENN’s valuation and attractiveness to potential acquirers like Boyd and Flutter.