Casino Operator Penn Entertainment Faces Major Shareholder's Bid For Board Representation
Portfolio Pulse from Vandana Singh
HG Vora Capital Management, holding an 18.5% economic interest in Penn Entertainment Inc (PENN), is in talks for board representation. The hedge fund, owning an 11% stake, may seek a proxy fight if negotiations fail. Penn's stock is seen as undervalued by HG Vora, criticizing its capital allocation and M&A strategy. Penn's recent divestiture of Barstool Sports and a deal involving ESPN, owned by Disney (DIS), led to a 15% stock decline this year. PENN shares rose 6.52% to $26.64 recently.
December 28, 2023 | 4:25 pm
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NEUTRAL IMPACT
The Walt Disney Co. is mentioned in relation to Penn Entertainment's rebranding of its Barstool sportsbook to ESPN Bet, which is expected to occur this autumn. Disney's involvement comes with warrants to purchase Penn shares valued at about $500 million.
Disney's involvement through ESPN is tangential to the main story of HG Vora's potential board influence on Penn. The impact on Disney's stock is likely to be minimal in the short term, as the focus is on Penn's governance and performance.
CONFIDENCE 70
IMPORTANCE 40
RELEVANCE 30
NEUTRAL IMPACT
HG Vora Capital Management is negotiating for board representation in Penn Entertainment Inc, criticizing its capital allocation and M&A strategy. The fund may initiate a proxy fight if talks fail, and Penn's stock has declined by 15% this year.
HG Vora's push for board representation and potential proxy fight indicates significant corporate governance activity, which could lead to volatility. However, the recent stock price increase suggests the market may view these developments positively in the short term.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90