Penn National Gaming, now rebranded as Penn Entertainment, announced its intentions to buy out the remainder of Barstool Sports, one of its longtime partners. The former company already owns a significant part of Barstool Sports and is now looking to finalize the acquisition.
Penn Entertainment has been working together with Barstool Sports for several years now. At the beginning of 2020, Penn acquired a 36% stake in the sports and pop culture company in a $161 million deal.
Now, Penn Entertainment plans to completely acquire Barstool. According to the former company’s recent financial report, it plans to pay an additional $62 million to increase its stake in Barstool Sports until it owns 50% of the company. Afterwards, Penn Entertainment plans to pay $325 million to acquire the remaining 50% of Barstool Sports’ common stock.
Penn Entertainment also shared that it hopes to finalize this move by February 2023. Afterward, Barstool Sports would become a fully-owned subsidiary of the US-based gambling company.
The Deal Might Tarnish Penn’s Image
It should be noted that the deal between Penn Entertainment and Barstool Sports may also have a negative effect on the former company’s business. This stems from recent controversies involving Dave Portnoy, founder of Barstool Sports.
According to the allegations, Portnoy engaged in sexual misconduct. The founder of the sports and pop culture blog allegedly mistreated some of his sexual partners. Some of his alleged victims claim he filmed the intercourse without their permission. Although Portnoy denied those claims and emphasized that all interactions were consensual, the topic quickly escalated into a big controversy.
Jay Snowden, chief executive of Penn Entertainment, contacted his company’s shareholders and asked them not to judge hastily. Despite that, many believe that Penn Entertainment should thread lightly lest it tarnishes its public image.
Penn’s Business Is Going Strong
Penn Entertainment rebranded from Penn National Gaming just two weeks ago. The company made the announcement when it posted its results for the second quarter of the year.
Penn reported $1.63 billion in revenue for the quarter which represents a 5.2% year-on-year increase. EBITDA also slightly increased from $470.1 million in Q2 2021 to $476.5 million in Q2 2022. The company recorded a net income of $26.1 million which once again demonstrated the company’s growth.
Speaking about the rebranding, Snowden explained that the new name maintains ties to the company’s legacy while better reflecting the company’s evolution.