Score Media and Gaming agrees to $2 billion cash and stock takeover bid from Penn National

Gaming stocks got a boost on Thursday following news that Toronto and Nasdaq-listed Score Media and Gaming Inc., which operates theScore, has agreed to a $2 billion in cash and stock options takeover bid from Penn National Gaming Inc. Nasdaq-listed Penn National said Score Media and Gaming shareholders will receive $17 in cash and 0.2398 shares of its common stock for each theScore share, bringing the total share price to $34.00. Penn National estimates the acquisition will provide adjusted EBITDA growth in two years, an incremental $200 million medium-term adjusted EBITDA, and $500 million of incremental long-term adjusted EBITDA upside. READ: Real Luck Group partners with Aspire Global's BtoBet for casino and sportsbook solutions at Luckbox Upon completion of the transaction, current Penn National and theScore shareholders will hold approximately 93% and 7% respectively, of the company’s outstanding shares. Penn National expects to fund the approximately US$1 billion cash portion of the consideration using existing cash on its balance sheet. In a statement, Penn National CEO Jay Snowden said: "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.” He added: “Importantly, the transaction provides us with a path to full control of our own tech stack. theScore has developed a state-of-the-art player account management system and is finalizing the development of an in-house managed risk and trading service platform. This should lead to significant savings in third party platform costs and allow us to broaden our product offerings – providing the missing piece for operating at what we expect to be industry-leading margins. In addition to the synergies, we’ll be gaining access to theScore’s deep pool of product and engineering talent and data-driven user analytics which will help drive our customer acquisition, engagement, retention strategies and cash flows." The deal increases Penn National’s reach in North America, with Score Media and Gaming positioned to leverage the Canadian mobile sports betting marketplace. Penn National purchased the Barstool Sports app in 2020 for $450 million. John Levy, chairman and chief executive officer of theScore, commented: “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 have been strategic partners with Penn National since 2019 and have come to realize that they have the same strong culture and appreciation for how to grow a business. Jay and his team have done a tremendous job building an exceptional retail business and online gaming platform in partnership with Barstool Sports and we are confident that by combining our leading sports media brand and proprietary technology, we will solidify Penn National as a market leader,” Levy added.. TheScore transitioned into its role as a digital-based outlet in 2012 when it sold its broadcast business to Rogers Communications for $167 million. It has built a sports gaming and media division and attempted to leverage its mobile app user base into a competitive sports betting business. The company launched theScore Bet app for mobile wagers in 2019, and this year made its debut on the Nasdaq. 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 The move highlights valuations for other gaming companies in the space such as Real Luck Group Ltd. and its subsidiary companies doing business as 'Luckbox'. Contact the author at jon.hopkins@proactiveinvestors.com