“Penn National Gaming, Inc. (Penn National) is acquiring Score Media And Gaming (theScore).”
The announcement details an agreement that will see Penn National buy theScore Bet for nearly US$2 billion in cash and stock. Acquisition of the leading digital media and sports betting technology company will allow Penn to bring more technology in-house.
The deal also provides the American casino operator (and part-owner of Barstool Sports) deep access to the emerging Canada online sports betting market.
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,” Jay Snowden, president and CEO of Penn National, said in the press release.
“TheScore’s unique media platform and modern, state-of-the-art technology is a powerful complement to the reach of Barstool Sports.”
Penn National purchased Barstool for US$450 million in 2020.
Rules of engagement
The terms of the agreement dictate a cash payout of US$17.00 and 0.2398 shares of Penn National common stock for each theScore share. The transaction, unanimously approved by directors of both companies, is expected to close in the first quarter of 2022. At closing, current Penn National and theScore shareholders will hold nearly 93% and 7% of Penn’s outstanding shares. Existing cash will fund the almost US$1 billion cash payout.
“We are now uniquely positioned to seamlessly serve our customers with the most powerful ecosystem of sports, gaming and media in North America, ultimately creating a community that doesn’t currently exist,” said Snowden.
According to Penn’s CEO, users will access a unique mobile sports betting and casino platform. Highly customizable bets, enhanced in-game wagering, real-time stats, and personalized content will drive customer engagement and retention.
“Importantly, the transaction provides us with a path to full control of our own tech stack,” said Snowden.
“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, Penn will gain access to theScore’s pool of product and engineering talent and data-driven user analytics. Snowden expects this will drive customer acquisition, engagement, retention strategies and cash flows.
“Operators that have achieved early online market share have done so primarily through first-mover advantage, leveraging existing customer databases and significant marketing spend,” Snowden concluded.
“Long-term winners will be defined by best-in-class products, bespoke content, efficient customer acquisition, multi-platform reach and broad market access.”
Let’s make a deal
According to theScore’s Chairman and CEO, John Levy, the deal brings together two companies in a shared vision for how media and gaming intersect.
”I’m proud of theScore team and all of our accomplishments.”
He believes the time is right to align with Penn National and scale to accelerate theScore’s business. “We are excited to join forces with Penn to form the most powerful media and gaming company in North America.”
Levy also believes theScore’s innovative, technology-led integrated media and gaming business has set them up for North American success. Particularly in the emerging commercial sports betting market in Canada.
Penn intends to operate theScore as a stand-alone business, led by the Levys. This includes maintaining theScore Bet app and brand consumers have come to trust.
“With Penn’s support, we will continue to invest in building our Canadian operations, growing our footprint and expanding our workforce,” said Levy. “On a personal note, Benjie and I are very much looking forward to continuing to head up theScore as part of the new combined company.”
TheScore has been a strategic partner with Penn National since 2019. During that time, Levy says he realized they share a culture and appreciation for how business is done.
“Jay and his team have done a tremendous job building an exceptional retail business and online gaming platform in partnership with Barstool Sports,” said Levy. “We are confident that by combining our leading sports media brand and proprietary technology, we will solidify Penn National as a market leader.”
Jon Kaplowitz, head of Penn Interactive, noted the significant milestone for Penn would allow a greater ability to innovate and offer a best-in-class product.
“Personally, I am excited to join forces with John, Benjie, and the rest of theScore team,” said Kaplowitz.
A pair of aces, high
The deal creates a first-of-its-kind, vertically integrated media and omni-channel gaming business, according to Benjie Levy of the Score. And it marries world-class technology, engaging sports content, and unparalleled reach.
“This deal bolsters our ability to grow our already strong North American presence from our base in Canada,” he said.
For the younger Levy, also theScore’s president and COO, the acquisition primes theScore to further capitalize on the emerging Canadian opportunity.
“The transaction will provide theScore with immediate scale and resources,” he said, noting the day-to-day benefits for customers and employees.
The deal also provides shareholders “immediate liquidity at a substantial premium” and the chance to benefit from future upsides.
At the time of publication, theScore’s shares were up more than 80%. Penn share price, which dropped shortly after opening, had rebounded, rising a little more than 6%.
