Major Penn Entertainment Shareholder Is Launching Proxy Fight
The firm has criticized the casino operator’s M&A history, share performance
Investor HG Vora is launching a proxy fight at casino operator Penn Entertainment PENN 4.77%increase; green up pointing triangle and is submitting nominations for three independent board seats, according to people familiar with the matter.
The details
The Wall Street Journal reported in late 2023 that HG Vora was looking to win representation on Penn’s board. The push has taken some time to play out.
New York-based HG Vora said in a securities filing earlier this month that it had reduced its stake in Penn to less than 5% to be able to launch a proxy battle.
The firm had been talking to gambling regulators in more than two dozen states to obtain the required gambling licenses to submit nominees to Penn’s board. HG Vora said it was caught up in one jurisdiction, and it cut its stake so it could proceed with its nominations.
HG Vora’s nominees are:
Carlos Ruisanchez, former chief financial officer of Pinnacle Entertainment (which was bought by Penn in 2018).
William J. Clifford, former chief financial officer at the gambling-focused real-estate investment trust Gaming & Leisure Properties.
Johnny Hartnett, former chief executive officer of the European gambling-and-tech business Superbet Group.
It marks the first time in HG Vora’s 15-year history that the firm has launched such a fight.
The context
Penn operates 43 casinos and racetracks in 20 states, as well as online sports betting and online casino gambling in numerous jurisdictions, according to its website.
HG Vora, which isn’t typically an activist firm, believes Penn has a poor record of capital allocation, including what it views as failed acquisitions.
The company bought Barstool Sports in a two-step process that kicked off in 2020, spending a total of around $550 million on the sports-media publisher. In 2023, Penn largely unwound the deal, which gave it exclusive rights to use the Barstool brand in its sports-betting products. It said it would use ESPN’s brand in its online sportsbook and sell its Barstool ownership back to the founder, David Portnoy, for $1.
Penn’s Barstool sportsbook was later rebranded to ESPN Bet.
Penn’s share price has tumbled since hitting a record in early 2021, significantly underperforming the S&P 500 and its closest peer in the industry, Boyd Gaming. The company now has a market value of around $3.1 billion.
HG Vora said it believes Penn’s stock is deeply undervalued and sees untapped opportunities in the firm’s portfolio.
HG Vora was founded in 2009 by Parag Vora. The firm is known for working with gambling companies and their boards, including when it helped sell U.K.-based Gamesys Group to Bally’s.