Commission Approval Moves Penn National Gaming Closer to $8.9B Sale

Another hurdle has been cleared for Penn National Gaming Inc.’s sale now that the West Virginia Lottery Commission has given the green light for the deal. The Wyomissing, Pa.-based gaming company will be snapped up by funds managed by affiliates of Fortress Investment Group L.L.C. and Centerbridge Partners L.P. in a merger valued at $8.9 billion, including the buyers’ repayment of approximately $2.8 billion in existing debt.As per terms of the merger agreement, announced June 15, 2007, Fortress and Centerbridge will shell out $67 in cash for each share of Penn National common stock. The offer was nothing to sneeze at, as it constitutes a 31 percent premium over the company’s closing share price the day prior to the announcement. Fortress and Centerbridge are relying on Deutsche Bank and Wachovia for financing.With the West Virginia Lottery Commission having given the deal the go-ahead, Penn National must also obtain the West Virginia Racing Commission’s approval; the company owns one property in the state, Charles Town Races & Slots. Authorities in other states where the company has a presence have also weighed in on the merger. The New Jersey Racing Commission gave its thumbs-up last month and the Ohio Racing Commission gave its endorsement last November.If all goes as planned, the merger will close during the second quarter of this year. The deal will take Penn National, which had its IPO in 1994, private. There has been no shortage of multi-billion casino company privatization transactions over the last few years. Harrah’s Entertainment Inc.’s sale to Apollo Management L.P. and TPG Capital LP for $17.1 billion plus the assumption of $10.7 billion in debt was finalized just two months ago.Penn National’s portfolio of gaming and racing facilities encompasses 19 properties with approximately 1,730 hotel rooms and over 900,000 square feet of gaming floor space in 15 jurisdictions in the United States and Ontario, Canada. Company stock opened today at $40.58 today.