PENN Entertainment's proxy battle with activist investor HG Vora has made new progress, as an independent committee determined that the board acted with integrity and in the company's best interest when it reduced the size of the board last year. This year-long corporate conflict may be nearing its end. The committee's report emphasizes that avoiding regulatory risks was key to the decision-making process, while HG Vora accuses the investigation of bias, with both parties sticking to their positions. More detailed analysis reports are available on the PASA official website.
Investigation Results and Board Decisions
The independent litigation committee clearly stated in its report submitted to the federal court on November 26 that PENN's board reduced the number of director seats from nine to eight with integrity and in the best interest of the company. The committee believes this did not violate fiduciary duties nor should it lead to derivative claims, essentially supporting the board's decision. They specifically mentioned that the board was advised throughout by legal and gambling experts, and the decision was not made lightly.
Regulatory Risks and Nomination Controversies
One of the main considerations for the board's reduction was to avoid potential regulatory risks, as the gambling license is the company's most important asset. The report spends considerable time discussing HG Vora's past regulatory issues, noting that the fund has a "history of pushing the boundaries of gambling control," and had violated institutional exemption clauses last December, and previously paid nearly a million dollars in fines to the SEC for failing to timely file a 13D form. Regarding HG Vora's third nominee, William Clifford, the committee believes he is closely associated with a "controversial, unlicensed shareholder determined to influence corporate governance," and his nomination had previously been rejected due to limited interactive gambling experience and conservative strategic views.
Long-term Conflict and Legal Progress
This dispute has lasted the entire year, with HG Vora initiating a proxy fight in early 2025, criticizing PENN's strategic direction—particularly the acquisition and subsequent sale of Barstool Sports for $1—damaging shareholder value. With investors filing a lawsuit and releasing a 116-page critical report on May 7, the conflict escalated further. Now, the special committee's investigation results give PENN a significant legal advantage, and if the court accepts the committee's conclusions, some of HG Vora's claims may be dismissed. However, investors may still question the committee's independence or methodology, and the dispute could continue to drag on.
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