Boyd Gaming’s $9B rumored bid for Penn spurs rally

Following a rumor suggesting that Boyd Gaming may be contemplating a buyout approach of more than $9 billion for the regional casino operator, Penn Entertainment‘s shares were suspended late Thursday and then rallied.

Based in Las Vegas Boyd might be thinking of acquiring Penn for a price that exceeds $9 billion, including debt. Neither firm has made any public comments. Nine days after Boyd added Michael Hartmeier to its board of directors, the rumor surfaced, fueling hopes that the business may challenge Penn.

Felicia Hendrix, the CFO of Penn, spent 12.5 years as a managing director at Barclays, where Hartmeier previously held the position of group head for accommodation, gaming, and leisure investment banking. Hendrix’s tenure there coincided with Hartmeier’s.

Three weeks after Penn investor the Donerail Group urged the gaming company’s board of directors to sell itself after a string of expensive errors in the online sports wagering industry, the report was released on Thursday. Boyd’s proposed $9 billion bid for Penn, if it moves forward, would more than triple the target’s current market capitalization of $2.72 billion.

In the event that Boyd, or any other potential buyer, makes a $9 billion offer for Penn and the sale goes through, it will be the biggest casino sector transaction since Eldorado Resorts acquired Caesars Entertainment for $17.3 billion in 2020.

Even though Boyd had a $5.1 billion market cap as of late Thursday, its $7.8 billion enterprise value suggests that in order to close a transaction with Penn, it may need to go to the capital markets and issue debt or equity.

Furthermore, since Boyd and Penn operate in several of the same states—Illinois, Kansas, Louisiana, Nevada, and Pennsylvania, among others—there might be regulatory obstacles. Regulators in those jurisdictions and others might voice concerns about competition issues or the possibility that an acquisition of this size could lead to asset sales.