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Shares of PENN Entertainment (NASDAQ:PENN) stock are in the red after the company filed a prospectus settlement for the resale of up to 1.25 million shares. The “Selling Shareholder” section of the filing lists a single individual: Dave Portnoy. PENN notes that it issued these shares to Portnoy on Feb. 17 as part of its acquisition of Barstool Sports.
Prior to the resale, Portnoy will own 1.48 million shares, equivalent to a 0.98% ownership stake. After the resale, his position will slide down to 226,800 shares, which is a 0.15% ownership stake.
PENN will not receive any gross proceeds from the resale.
PENN Stock: Penn Files 1.25 Million Share Resale for Dave Portnoy
Earlier this week, the sports entertainment industry received a major surprise after it was reported that Portnoy had purchased Barstool back from PENN for just $1. Back in 2019, PENN shelled out $163 million to acquire a 36% stake in Barstool, which consisted of $135 million in cash and $28 million in non-voting convertible preferred stock. On Feb. 17, PENN announced that it had acquired the remaining stake in Barstool for roughly $388 million. The company has disclosed that it expects to lose up to $850 million on its Barstool purchase.
This is obviously bad news for PENN, but a great deal for Portnoy. As part of the deal, Portnoy must agree to certain noncompete agreements and provide PENN with 50% of the proceeds if Barstool undergoes a sale or monetization event. “For the first time in forever we don’t have to watch what we say, what we do — it’s back to the pirate ship,” said Portnoy following the sale.
In its second-quarter earnings report, PENN reiterated that it would rebrand its Barstool Sportsbook to ESPN Bet during Fall in collaboration with Disney (NYSE:DIS). ESPN Bet will be active in the 16 states where PENN is licensed.
“The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN,” said ESPN Chairman Jimmy Pitaro. “PENN Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN BET.”
During the quarter, PENN reported revenue of $1.67 billion, up by 2.9% year-over-year, and total liquidity of $2.2 billion.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.