Penn National Gaming agrees to a private buy-out

Penn National Gaming Inc. (NASDAQ:PENN) has agreed to be acquired by a private joint venture.

Penn National Gaming agrees to a private buy-out The company which owns 18 casinos and racetracks will be taken over by the private firms Fortress Investment Group LLC (NYSE:FIG) and Centerbridge Partners LP for $6.1 billion. Investors will get $67 per share, Penn announced today, or over 30% higher than yesterday's closing price. The new owners will also assume the $2.8 billion in debts Penn National Gaming Inc. has accumulated.

The agreement allows Penn to look for higher bidders in the next 45 days. Many believe that Penn National has one of the best gambling management in the country, with names such as Peter Carlino and William Clifford, and the management team will stay with the company after the new owners take over the reins.

Although rumors of a take-over have been surrounding Penn National for quite some time, the acquisition announcement caught many analysts by surprise. According to market watchers, the company was not even on the radar for an upcoming buy-out. But the actual agreement was no surprise to anyone. It comes as a part of a continuing trend of gambling companies take-overs, following the recent purchases of Harrah's Entertainment Inc. (NYSE:HET), Station Casinos Inc. (NYSE:STN) and the bid for Trump Entertainment Resorts Inc. (NASDAQ:TRMP). Many private investors are attracted to the cash flow of the casinos and the real estate, therefore the trend is expected to continue.

Penn anticipates the deal to be completed within the next 12 to 18 months, pending approval by regulatory bodies. If the deal is not finished by June 15th 2008, the firms will pay an additional 1.49 cents a day per share for each day after.

Penn National Gaming Inc. owns or operates gaming properties located in Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, Ontario and West Virginia. Penn also acquired the Zia Park Racetrack and Black Gold Casino in New Mexico this April, and will open gambling facilities in Pennsylvania and Main by 2008. Penn also offers online horse racing betting to residents of 14 states.

Published on 06/15/2007