3 Reasons To Love Penn National's theScore Buyout

Penn National Gaming, Inc PENN announced a $2 billion buyout of Score Media and Gaming Inc SCR on Thursday, and Bank of America analyst Shaun Kelley said there are plenty of reasons for Penn investors to love the deal.

On Friday, Kelley said Penn’s acquisition of theScore sports news and statistics app is based more on Penn’s strategy moving forward than Score Media’s current financials. Score Media reported just $5 million in revenue and a net loss of nearly $30 million in the second quarter.

Related Link: Penn National Acquires Score Media For $2B: Why Barstool Sports Founder Dave Portnoy Says It's A Good Match

Reasons To Love The Deal: Penn shares didn’t react much to the deal on Thursday, but Kelley listed three reasons Penn and theScore are a good fit:

1. TheScore’s audience and content will serve as a funnel to Penn’s mobile sports betting business.
2. TheScore has a proprietary technology stack, which includes in-house player account management (PAM) software.
3. TheScore gives Penn immediate exposure to the legalized Canadian sports betting industry, which launches in Toronto in early 2022.

Immediate Impact: TheScore app had 3.8 billion user sessions in 2020, and the platform has more than 110 content creators that will help complement Penn’s Barstool Sports personalities.

In addition, Score Media has more than 130 people on its tech team that will help Penn develop the technology it needs to compete with FanDuel, Draftkings Inc DKNG and MGM Resorts International MGM in the U.S. mobile sports betting space.

“SCR also provides a strong presence for Canadian sports betting, which can be a $600M-$1.6B GGR opportunity, adding $30-70M of EBITDA, or $110M+ after factoring in additional revenue opportunities and synergies,” Kelley said.

Bank of America has a Buy rating and a $110 price target for Penn.

Benzinga’s Take: Penn National hit a home run when they acquired Barstool for $450 million in early 2020, so it’s difficult to question its buyout of theScore at this point.

In the year following the Barstool takeover in January 2020, Penn National shares gained 257%.