Penn National Gaming to acquire Score Media and Gaming

The US gambling operator Penn National Gaming (PNG) has announced plans to acquire Score Media and Gaming (theScore) in a deal worth approximately $2bn.

Score Media and Gaming is the company behind the digital media and sports betting platform theScore.

This deal builds on an existing partnership between the companies from 2019, where Penn provided market access to theScore’s sportsbook product in several US states.

Penn to acquire theScore

According to the announcement, PNG will acquire Score Media and Gaming for approximately $2bn in cash and stock.

Under the terms of the agreement, theScore shareholders will receive $17 in cash and 0.2398 shares of Penn National common stock for each theScore share. This implies a total purchase consideration of $34 per theScore share based on Penn National’s 5-day volume-weighted average trading price as of July 30, 2021.

The announcement states that the purchase has been unanimously approved by the boards of directors of both companies and is currently expected to close in the first quarter of 2022.

Once the deal is complete, Penn shareholders will hold 93% of the company’s outstanding shares, while theScore shareholders will hold 7%.

Penn expects to fund the approximately $1 billion cash portion of the consideration using existing cash on its balance sheet.

theScore will continue to operate as a stand-alone business and will remain headquartered in Toronto. The Levy family will continue to lead the business.

Jay Snowden, President and Chief Executive Officer of Penn National, commented, “We are thrilled to be acquiring theScore, which is the number one sports app in Canada and the third most popular sports app in all of North America. theScore’s unique media platform and modern, state-of-the art technology is a powerful complement to the reach of Barstool Sports and its popular personalities and content.”

John Levy, Chairman and Chief Executive Officer of theScore, said: “This deal brings together two companies that share a vision for how media and gaming intersect, and we could not be more excited to join the Penn National family. I’m proud of theScore team and all of our accomplishments, and believe the time is right to take the next step and align with a company in Penn National with the resources and scale to accelerate our business. We are excited to join forces with Penn to form the most powerful media and gaming company in North America.

“We’ve built an innovative, technology-led integrated media and gaming business that has us poised for success across North America, including the highly anticipated upcoming rollout of commercial sports betting in Canada.”

What does this deal mean for Penn?

The deal to acquire theScore marks the latest acquisition for PNG after the US operator acquired Barstool Sports last year.

By acquiring theScore, Penn will bring the Canadian business’ technology in-house.

According to the announcement, this will allow Penn to manage all “critical aspects of its technology stack, leading to greater control over its product development roadmap, reduced costs, and an enhanced customer experience.”

The deal would also allow Penn an opportunity to put all its products on a proprietary platform. Currently, Barstool sportsbook uses Kambi’s platform.

Penn also hopes the acquisition will allow for “enhance” customer acquisition and retention.

As outlined by Penn, theScore is the third-largest sports app in North America and number one in Canada. Penn believes that the crossover between theScore’s media product and its sportsbook app will help to better engage and retain users.

Penn also said that an “increased cross-promotion ecosystem” between theScore and Barstool is expected to lead to higher revenue.

The deal will also provide Penn with the opportunity to expand into new verticals in the future. While the press statement does not go into detail on this, it does note opportunities in the esports media vertical.

In addition to bringing another US sportsbook under Penn’s control, the purchase will provide Penn with growth opportunities in the newly regulated Canadian sports betting market.

In June, Canada passed a bill that sought to legalise single-event sports wagering in the country.

In its statement, Penn said it “expects to leverage Canada’s world-class technology talent pool to expand theScore’s engineering and production workforce based in Ontario as the business scales.”