HG Vora Capital Management, a major shareholder in Penn Entertainment Inc PENN with an 18.5% economic interest, is reportedly engaged in discussions with the casino operator regarding board representation.
The hedge fund, as per a recent securities filing, aims to secure positions on Penn's board, although the exact number of seats remains undisclosed.
The fund's latest 13F filing unveiled an 11% stake in Penn.
HG Vora Capital Management, traditionally not an activist investor, perceives Penn's stock as significantly undervalued and has been engaging in dialogues with management to strategize a turnaround.
The investment firm criticizes Penn's historical record in capital allocation, the Wall Street Journal noted, citing unsuccessful ventures in mergers and acquisitions.
If these talks fail to materialize into an agreement, HG Vora Capital Management is contemplating the possibility of initiating a proxy fight, as indicated by sources familiar with the matter, WSJ noted.
According to proxy materials, Penn Entertainment's window for nominating director candidates leading up to the 2024 shareholder meeting spans from January 8 through February 7.
As per the WSJ, the company's board members operate on staggered terms, facing elections every three years, with two members having held their seats for over two decades.
The company made headlines with its acquisition of Barstool Sports, a two-step process commencing in 2020 that amounted to an expenditure of approximately $550 million.
However, earlier this year, Penn reversed the deal, relinquishing exclusive rights to the Barstool brand in its sports-betting products and divesting its Barstool ownership back to founder David Portnoy for $1.
The agreement between Penn and ESPN, owned by The Walt Disney Co. DIS, involved warrants valued at about $500 million to purchase Penn shares.
Following the rebranding of Penn's Barstool sportsbook to ESPN Bet this autumn, the company has seen a decline of approximately 15% in its stock value this year, impacting its market capitalization.
Price Action: PENN shares are up 6.52% at $26.64 on the last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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