Boyd Gaming Unlikely to Offer Premium for Penn Entertainment, Analyst Suggests
Deutsche Bank analyst Carlo Santarelli has expressed skepticism regarding Boyd Gaming’s potential acquisition of Penn Entertainment at a premium price.
Stalking Horse Role
Santarelli pointed out that gaming operators generally avoid being perceived as hostile. Consequently, Boyd Gaming’s involvement in the Penn Entertainment acquisition discussions might be more strategic than earnest, serving as a preliminary bidder to test the waters and set the stage for other potential offers.
The analyst noted the high short interest in Penn Entertainment’s stock, making it a challenging position for Boyd Gaming to consider an incremental purchase at this time. The lingering uncertainty creates a difficult environment for any potential acquisition moves.
Potential Discussions and Investor Sentiment
While acknowledging the possibility of ongoing discussions between Boyd Gaming and Penn Entertainment, Santarelli emphasized that any negotiations imply a deeper level of interest than many investors had anticipated in recent weeks. He suggested that these talks, if happening, indicate a serious consideration of the acquisition, despite the prevailing uncertainties.
Santarelli does not believe that any potential bid from Boyd Gaming would include Penn Entertainment’s ESPN betting division.
He highlighted the regulatory complexities involved in acquiring Penn’s land-based entities, which would require approvals from ten states and Penn’s landlord, Gaming & Leisure Properties, as well as the Federal Trade Commission.
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