Activist investor HG Vora and Penn Entertainment are gearing up for a showdown at the ESPN Bet operator’s 2025 Annual General Meeting (AGM).
HG Vora yesterday (29 January) announced the nomination of three director candidates for Penn’s board at the upcoming AGM, which has not yet been scheduled.
It follows the New York-based investment firm, formerly Penn’s largest single investor, trimming its stake in the business earlier in the month to appease regulators ahead of a proxy battle.
HG Vora’s founder and portfolio manager, Parag Vora, said: “Penn’s board has overseen a misguided Interactive strategy that has resulted in the reckless spending of nearly $4bn — greater than the company’s entire market capitalisation — on overpriced, poorly negotiated M&A transactions and media partnerships that have resulted in large ongoing operating losses due to an inability to execute.
“The company’s Interactive strategy has been an abject failure due to a pattern of overpaying, overpromising, and not delivering.”
The potential directors comprise former Penn National Gaming and GLPI chief financial officer William J. Clifford, ex-SuperBet CEO Johnny Hartnett and Sorelle Capital co-founder Carlos Ruisanchez.
HG Vora said all three of its candidates would operate independently of HG Vora and company management.
It argued there remains significant unrealised value in Penn’s regional casino portfolio and collection of Interactive assets.
However, the fund argued Penn’s board has “numerous deficiencies which have translated directly into abysmal returns for shareholders”.
HG Vora highlights share price decline
HG Vora highlighted that Penn’s shares have declined 81% over the past four years, underperforming the S&P 500 Index and peer Boyd Gaming, which returned +69% and +73% respectively over the period.
The firm added: “To date, there have been no repercussions for the board’s persistent bad judgment and disappointing shareholder returns. We believe this is in part due to Penn’s weak corporate governance, which disenfranchises shareholders and entrenches board members while rewarding its CEO with excessive compensation.
“It should be clear to all stakeholders that change is urgently needed to address these failings and help Penn achieve its full potential.
“To that end, this is the first time in our firm’s 15-year history that HG Vora has decided nominating directors is necessary.
“We believe these three highly qualified, independent director nominees bring proven track records of enhancing shareholder value and the skills and industry expertise to help maximise value for all Penn shareholders.”
In a press release issued the same day, Penn said it would be open to reviewing HG Vora’s proposed board nominees.
The statement said: “The Penn board and management team are committed to creating long-term value for all shareholders and will continue to take actions to achieve that objective.
“We regularly solicit feedback and engage with the investment community about our strategy, performance and business priorities. The board’s Nominating and Corporate Governance Committee will carefully review HG Vora’s proposed director nominees, in line with Penn’s normal evaluation procedures”.
Penn’s share price has risen 3.3% since HG Vora announced the director nominations.
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