Barstool Sports, the controversial sports content provider, has reached an agreement to sell a 36 percent stake to Penn National Gaming Inc. for about $163 million. Penn National shares rallied on the news.
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The deal, which values Barstool at about $450 million, gives Penn National the chance to attract a new, younger demographic in the fast-growing $150 billion sports-gambling business.
“This exciting new partnership with Barstool Sports reflects our strategy to continue evolving from the nation’s largest regional gaming operator, with 41 properties in 19 states, to a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment,” Penn National CEO Jay Snowden said in a statement.
Under the terms of the deal, Penn National will pay $135 million cash and $28 million in non-voting convertible preferred stock. After three years, Penn National will invest approximately $62 million to raise its stake to about 50 percent.
After the closing of the transaction, which is expected to occur in the first quarter, The Chernin Group, which currently owns 60 percent of Barstool, will have its stake reduced to 36 percent. The remaining 28 percent stake will be held by founder Dave Portnoy, CEO Erika Nardini and Barstool employees.
“This opportunity is a dream of mine and why I started Barstool Sports in the first place,” Portnoy said in a statement. “Barstool Sports has a deep sports and gaming history and from the moment we met Jay and the Penn National team we knew this could be an exciting and game changing partnership and we can't wait to get started.”