The Penn National Gaming logo is displayed on a smartphone.
Rafael Henrique | SOPA Pictures | LightRakete | Getty Images
Shares in Score Media and Gaming, which operates theScore, rose more than 60% Thursday morning after Penn National announced it would acquire the company for $ 2 billion in cash and stock options. Penn National shares fell 2% after the market opened.
The deal increases Penn National’s reach in North America as Score Media and Gaming positions itself to take advantage of the Canadian mobile sports betting market.
Penn National said that Score Media and Gaming shareholders will receive $ 17 in cash and 0.2398 common shares for each theScore share, bringing the total price to $ 34.00. Penn National estimates the acquisition will provide adjusted EBITDA growth, medium-term adjusted EBITDA of $ 200 million, and additional long-term adjusted EBITDA of $ 500 million in two years time.
Goldman Sachs and Morgan Stanley acted as advisors on the transaction.
Penn National also supports the Bartool Sports app, which was purchased for $ 450 million in 2020. In a statement, Penn National CEO Jay Snowden said the acquisition of Score will enable the company to acquire the company’s in-house technology. That “should result in significant third-party platform cost savings and enable us to expand our product offering – and get the missing piece to operate at the industry-leading margins we expect.
“In addition to the synergies, we will gain access to theScore’s extensive pool of product and engineering talent and data-driven user analytics that will help us drive our customer acquisition, engagement, retention strategies and cash flows,” he added.
TheScore transitioned to its digital outlet role in 2012 when it sold its broadcasting business to Rogers Communications for $ 167 million. It built a sports games and media division and tried to turn its mobile app user base into a competitive sports betting business. The company launched the Score Bet mobile betting app in 2019 and made its Nasdaq debut this year.
Score Media and Gaming will ring the opening bell on March 16, 2021 on the Nasdaq.
While discussing theScore’s future last March, Chris Lencheski, chairman of private equity advisory firm Phenicia Lencheski, warned that the dollar average for attracting a new client would be a burden for companies with little capital and for the next 24 to 30 months Acquisitions and mergers would move 48 months.
Score Media and Gaming estimates its home market can grow to $ 5.4 billion, and the Ontario market alone could reach $ 2.1 billion by 2025. Canadians are placing over $ 7 billion in illegal bets, according to Bloomberg, as sports betting in the country is mostly limited to horse racing.
Penn National released its earnings report for the second quarter of 2021 on Thursday morning, posting revenue of $ 1.5 billion for the quarter.
Snowden is slated to appear on CNBC’s “Halftime” on Thursday.