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Investing.com -- Shares of Penn Entertainment (NASDAQ:PENN) climbed 3.5% following news that major shareholder HG Vora is launching a proxy fight, aiming to secure three independent board seats. This development comes as the Wall Street Journal reports that the New York-based investment firm has been working to gain the necessary gambling licenses to propose board nominees, after reducing its stake in Penn to less than 5% earlier this month.
The move by HG Vora represents the first time in its 15-year history that the firm has initiated such an action. HG Vora’s nominees include Carlos Ruisanchez, former CFO of Pinnacle Entertainment, William J. Clifford, former CFO at Gaming & Leisure Properties (NASDAQ:GLPI), and Johnny Hartnett, former CEO of Superbet Group.
Penn Entertainment, which operates 43 casinos and racetracks across 20 states and offers online sports betting and casino gambling, has faced criticism from HG Vora over what it perceives as a poor record of capital allocation and failed acquisitions. This includes the purchase and subsequent unwinding of the Barstool Sports deal, which has been replaced by a rebranding to ESPN Bet.
The company’s stock has fallen sharply since reaching a peak in early 2021, underperforming the S&P 500 and its industry peer, Boyd Gaming (NYSE:BYD). With a current market value of approximately $3.1 billion, HG Vora believes Penn’s stock is deeply undervalued and sees potential in the company’s portfolio that has yet to be realized.
This strategic push by HG Vora underscores the firm’s belief in Penn’s untapped opportunities and its commitment to influencing the company’s direction. The shareholder’s history of involvement with gambling companies suggests a strategic approach to board representation and company oversight.
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