Penn National will pay $135M in cash and $28M of its stock in a deal that values Barstool at $450MGETTY IMAGES
Penn National Gaming agreed to "buy a stake" in Barstool Sports for $163M in a deal that "positions the casino operator to compete in the growing U.S. sports-betting market," according to Sayre & Mullin of the WALL STREET JOURNAL. Penn National "plans to take a 36% stake" in Barstool, gaining "exclusive rights to use the Barstool brand in its sports-betting products." Penn National will pay $135M in cash and $28M of its stock in a deal that values Barstool at $450M. In three years, Penn National "will increase its stake to around 50% for a payment" of $62M. Sources said that options would then kick in to "increase the casino company's stake to control or full ownership, based on fair market value at the time." Penn National is "aiming to convert" some of Barstool's audience of roughly 66 million into "customers of its casinos and an online sports-betting app it is developing." Sources said that the company would do so "through marketing on Barstool Sports outlets and live events in Penn National casinos." The Chernin Group, which has held a majority stake in Barstool since '16, is to "keep 36% ownership." Key Barstool employees, including Founder Dave Portnoy and CEO Erika Nardini, would "keep a collective 28%" (WALL STREET JOURNAL, 1/29).
BIG MOVE FOR INDUSTRY: RECODE's Peter Kafka notes it is a "stunning deal for the digital media industry," as it comes while many publishers are "retrenching after a round of ultimately disappointing Facebook-fueled optimism and investment." The deal results in a "big payoff for The Chernin Group," which had reportedly invested some $25M to "buy controlling stakes in Barstool." Sources estimated that Chernin "owned around 60 percent of the company prior to today's deal." A source said that Barstool generated $90-100M in revenue last year, with most of that "coming from podcasts, merchandise sales, and gambling deals" (VOX.com, 1/29).
