PENN Entertainment is set to acquire 100% of Barstool Sports, meaning David Portnoy’s brand will become a wholly owned subsidiary of the recently rebranded gaming giant, formerly known as Penn National Gaming. The move was unveiled in a Form 8-K filing with the Securities and Exchange Commission (SEC), through which PENN exercised its right to take the company, expected to complete next year.
“As previously disclosed, PENN Entertainment has call rights with respect to all of the outstanding shares of common stock of Barstool Sports not already owned by PENN,” the filing reads. “PENN has exercised these call rights to bring its ownership of Barstool to 100%.”
The acquisition of the remaining Barstool shares is expected to be completed in February 2023, transforming the betting brand into a wholly-owned subsidiary of the Pennsylvania-based gaming operator. Completion of the transaction at that time is subject to certain conditions, including the absence of any governmental order or law prohibiting such takeover.
PENN first acquired a 36% stake in the sports media firm in February 2020, for a total consideration of $163 million. It subsequently secured additional shares, bringing its ownership to around 50% for an additional $62 million. According to Bloomberg, PENN is buying the rest of the shares in two steps that total $387 million.
The new move was an expected one, given that PENN CEO Jay Snowden had previously said the company planned to take full ownership of Barstool. Additionally, the company has withdrawn its theScore Bet brand from the US to solely focus it on the Canadian market, meaning Barstool would be PENN’s US-facing sports betting product.
The acquisition comes on the heels of a record-setting quarter for PENN, in which the company generated $1.6 billion. Its interactive segment, which includes Barstool and theScore, posted $142 million in revenue, a 40% bump. PENN utilizes Barstool branding in its sports betting efforts at its casinos, while a betting app is available in 11 states.
Even though Barstool Sportsbook has yet to reach the market share of giants such as FanDuel or DraftKings, the brand has been successful at leveraging Portnoy and other Barstool personalities to appeal to the younger customer segments in a cost-effective manner. In its Q2 results, PENN told investors Barstool had expended its social reach by delivering “highly engaging and relevant content,” particularly resonating with “the younger demographic.”
“Our Barstool branded retail sportsbooks resonate with the younger demographics and create meaningful cross-sell opportunities,” officials for the company noted at the time. “Our recently converted Barstool sportsbook in Lake Charles, Louisiana, set a new standard for retail sportsbook experiences, and we are seeing encouraging results in visitation and spend.”
The company is on track to convert its temporary sportsbook at L’Auberge Baton Rouge into a Barstool-branded amenity this fall, where it expects to have a similar positive impact. Based on success in Louisiana, PENN is also optimistic about upcoming Barstool retail sportsbook launches in Kansas and Ohio, where it operates properties bolstered by large casino databases.
Looking forward, PENN also has plans in place to migrate Barstool Sportsbook to the company’s in-house trading platform and tech stack, as it did with theScore Bet in late July. PENN targets Barstool’s migration in the US in Q3 2023, with the company already working with existing providers to ensure “a smooth transition process.”
Original article: https://www.yogonet.com/international/news/2022/08/18/63883-penn-to-turn-barstool-into-a-whollyowned-subsidiary-by-2023
