Boyd Gaming Does Not Rule Out Potential PENN Merger During Q2 Earnings Call

Written By Corey Sharp on July 26, 2024
A dart lands on the bullseye on a dart board beside the word

Boyd Gaming CEO, Keith Smith, did not specifically mention PENN Entertainment as a potential merger acquisition target. However, Smith kept the door open on the possibility of a transaction in the near future during the Boyd’s Q2 2024 earnings call.

The turmoil PENN Entertainment has faced over the last two months has the brought the idea of a sale to the table. Boyd Gaming has been linked to the Pennsylvania-based company multiple times, including a potential joint acquisition with Flutter.

It was unlikely that Boyd executives would address speculation during an earnings call, but the fact they didn’t rule anything out suggests something could be brewing.

Boyd Gaming to keep options open

Boyd Gaming has a track record of purchasing properties in the gambling space. It bought Valley Forge Casino in King of Prussia for $281 million back in 2018.

The company has 28 casinos located across 10 states, and has made a name on mergers and acquisitions. So, this type of territory is nothing new for Smith, who has been CEO since 2005.

“If you look back over the history of our company, the majority of our growth obviously has come through M&A, and I think we’ve developed a great expertise at it,” Smith said during the call. “We know how to buy properties [and] companies, [and] we know how to extract value out of these companies once they’re part of our portfolio.

“Look, we’ve always been willing, it’s not new news, to take a hard look at opportunities that arise. And so, we’ll continue to do that.”

The company did not address PENN, and spoke only in generalities when it came to mergers and acquisition questions. EVP and CFO, Josh Hirsberg, spoke about the checkpoints the company evaluates before making a transaction.

“It’s acquiring assets that have a strategic rationale, an acquisition that generates free cash flow and the valuation makes sense for us,” Hirsberg said.

After it “gets through that filter,” as Hirsberg described it, then it can start looking at financing options.

What an acquisition of PENN properties means for Boyd

While Boyd didn’t shut down rumors, by any means, it didn’t directly address them, either. However, a potential acquisition of PENN’s casinos would be a landmark transaction in the industry. PENN is valued at $9 billion to Boyd’s $7.8 billion.

PENN has 43 casinos across 20 states, including four Hollywood properties in Pennsylvania, which include:

  • Penn National Race Course
  • The Meadows
  • York
  • Morgantown

Including Valley Forge Casino, Boyd would have up to five properties in the Keystone State, should a deal with PENN go through.

PENN has been under a microscope since a top shareholder, Donerail Group, published a concerned letter in late May over failed online investments and the direction of the company.

Boyd reportedly reached out to PENN last month regarding a possible sale, which then heated up into the joint acquisition rumor with Flutter.

Boyd is the smaller company of the two, which is why financing a deal came up on the call. However, if Flutter buys PENN’s online arm, and Boyd acquires the retail business, that makes a deal more likely. It also should be noted that Boyd owns a 5% stake in Flutter’s FanDuel product.

Boyd stock price increases since reports

Boyd’s earnings price has been up and down in recent months. However, the price has increased since reports of a possible merger with PENN.

PlayPennsylvania first wrote of the situation on June 21. At that time, Boyd’s price closed at $54.59. As of Friday morning, it has climbed to $60.33, a 10.5% increase.

Perhaps investors are looking at the potential sale as an opportunity for Boyd, and are getting in on the action sooner rather than later.

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Corey Sharp

Corey Sharp is the Lead Writer at PlayPennsylvania bringing you comprehensive coverage of sports betting and gambling in Pennsylvania. Corey is a 4-for-4 Philly sports fan and previously worked as a writer and editor for the Philadelphia Inquirer and NBC Sports Philadelphia.

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