With rumors swirling around a potential sale of Penn Entertainment – a move that would impact the Missouri casino industry – its CEO was dismissive on a recent earnings call.
There has been speculation that Boyd Gaming wants to acquire Penn. Earnings + More recently reported in June that Boyd made a bid that was “being taken seriously” by Penn.
So far, neither company has confirmed a sale could be imminent. That includes Penn CEO Jay Snowden.
Boyd purchase of Penn could create several dilemmas
If Boyd did purchase Penn, it would potentially acquire all of Penn’s casino properties. Penn owns three of state’s 13 riverboat casinos.
With Boyd currently operating two casinos in the Show Me State, the gaming company would then own about 38% of the casinos in the state, a percentage probably too high for Missouri gaming regulators to be comfortable with. Especially since Missouri online casinos are limited to sweepstakes options.
The same scenario could play out in other states as well, as Boyd currently owns 28 casinos in 10 states. In Missouri, Boyd’s two resorts account for 35% of the state’s revenue from casinos.
A similar situation occurred when Eldorado Resorts bought Caesars Entertainment. Eldorado ended up owning six Missouri casinos. State gaming regulators required Eldorado sell at least two of its casino properties in the state before they would allow the sale.
In the earnings call, Snowden said selling properties isn’t as easy as it sounds.
“Just remember that our assets, land-based assets, are all part of different leases, and so it’s not as simple and easy as though, you just sell off an asset.”
Both Boyd and Penn CEOs mum on possible sale
When Snowden was asked by a reporter if Penn was considering a sale, the CEO dodged the question.
“We don’t comment, we haven’t commented and won’t comment on market rumors and speculation. What I will say is that as a company and as a board, we’re always and always have, always will evaluate opportunities to enhance value, and we’ll continue to take actions that we believe are in the best interest of the company and our shareholders.
“We’re very confident in our strategy and the value that it’s going to deliver for shareholders over the short term, medium term, long term. So, that’s the way I would answer that question. And, I would say, don’t believe everything you read.”
Boyd CEO Keith Smith was asked a similar question recently, although it wasn’t specifically about acquiring Penn. He was equally evasive.
“If you look back over the history of our company, the majority of our growth obviously has come through M&A (mergers and acquisitions). … Look, we’ve always been willing, it’s not new news, to take a hard look at opportunities that arise. And so, we’ll continue to do that.”
It’s worth noting that Penn reported a record second quarter for net gaming revenue in its interactive segment. The quarter produced a total of $1.4 billion in retail revenue and adjusted EBITDAR of $497 million. Additionally, Snowden introduced a new chief technology officer, Aaron LaBerge.
