Penn National Gaming to Be Acquired in $8.9B Cash Deal

June 15, 2007 By Barbra Murray, Contributing Editor


Penn National Gaming Inc. is about to get snapped up in a merger deal involving funds managed by affiliates of Fortress Investment Group L.L.C. and Centerbridge Partners L.P. The Wyomissing, Pa.-based gaming company entered into a definitive agreement to be acquired by the affiliates for approximately $8.9 billion in cash, including the assumption of $2.8 billion in existing debt.

The board of directors of Penn National has already signed off on the merger proposal, which calls for Fortress and Centerbridge to pony up $67 per outstanding Penn National share, of which there are currently 85.5 million. The offer constitutes a 31 percent premium over the company's last closing price of $51.14 per share. "The board of directors of any public company has a fiduciary responsibility to force shareholder value," a Penn National spokesperson told CPN. "When you look at the consideration here, the merger is fair and it is in the best interest of the shareholders and of the company."

Penn National is relying on Wachtell, Lipton, Rosen & Katz for legal advice on the deal, while Willkie Farr & Gallagher L.L.P. will serve as legal advisor to Fortress and Centerbridge. Deutsche Bank and Wachovia, which will provide Fortress and Centerbridge with financing for the acquisition, are also providing financial advice for the buyers. The proposed transaction is not yet a sure thing. As per the agreement, Penn National has the freedom to seek other offers over the next 45 days. However, providing that Penn National shareholders and relevant authorities give the go ahead on the Fortress and Centerbridge proposal, the transaction will likely close within the next 12 to 16 months.

Penn National owns and operates casino and horse racing facilities, and presently has a portfolio of 18 properties in Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia and Ontario, Canada.

The assets encompass over 1,730 hotel rooms and approximately 808,000 square feet of gaming floor space. Based in New York City, Fortress is a global alternative asset manager with $36 billion in assets under management as of the close of the first quarter. Centerbridge, also headquartered in New York City, is a $3.2 billion private investment fund.

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