Penn National Gaming will buy Canadian sports-betting firm Score Media and Gaming for nearly $2 billion in cash and stock, the companies said on Thursday.
The deal comes on the heels of a new betting bill that was passed recently in Canada, aiming to legalize betting on single sports events including football and hockey. Currently, such betting is only allowed in horse racing.
Previously, betting on sports was legal only through parlays, involving two or more games, or combinations of two or more bets in a single wager.
The upper chamber of the Canadian senate approved the bill and it now awaits royal assent to become a law.
Under the terms of the deal, Score shareholders will get $17 in cash and 0.2398 shares of Penn National for each share held. That implies a per share value of $34, or a premium of nearly 87% to the stock’s last close on the Nasdaq.
The deal should lead to significant savings in third-party platform costs and allow Penn National to broaden product offerings, said Jay Snowden, chief executive of Penn National, which owns about a third of Dave Portnoy’s Barstool Sports.
“Strategically we think this deal makes a lot of sense, driving deeper integration and in-house capabilities, but we suspect the market will have a different opinion on the premium being paid,” analysts at KeyBanc Capital Markets said.
Following the acquisition, Score will operate as a standalone business based in Toronto, the companies said, with the Levy family continuing to oversee Score.
The transaction has been approved by the boards of both companies and is expected to close in the first quarter of 2022.
Goldman Sachs and Code Advisors were the financial advisers to Penn National, while Morgan Stanley & Co and Canaccord Genuity Group were the financial advisers for Score.