Almost everyone thought of the Penn National Gaming Inc. (NASDAQ: PENN) private equity LBO merger as dead money for quite some time. It only officially became a dead merger this morning. This was the last of the big multi-billion deals still officially on the books that was put together back before we had a full blown credit crunch.
PNG Acquisition Company Inc. was the buyout entity, which was indirectly owned by certain funds managed by affiliates of Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners, L.P.
The buyout price of $67.00 per share was older than Methusela. Since January, this stock slid steadily from over $60.00 down to under $30.00. The deal was a known to be dead by everyone. But there is actually a silver lining here for the company. Penn National will get $1.475 Billion in cash out of this.
Affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia, and affiliates of Deutsche Bank will all be holders of those notes. To top it off, Fortress Investment Group's Chairman & CEO, Wesley Edens, will join the Penn National Gaming Board of Directors.
Keep reading for on the fly analysis, guidance, and ramifications at 247wallst.com.
MGM Mirage(NYSE:MGM) is recently up $1.78 to $87.38. Dubai World, a holding company for the Persian Gulf state, announced on 8/22/07 it will pay $2.7 billion to acquire a stake in MGM City Center, a 76-acre Las Vegas development. Dubai World will also buy 14 million shares from MGM for $84 a share and 14 million from investors. Unconfirmed chatter is circulating Dubai World will raise its tender bid.
Penn National Gaming(NYSEPENN), a diversified, multi-jurisdictional owner and operator of gaming properties, agreed to be acquired on 6/15/07 by certain funds managed by affiliates of Fortress Investment(NYSE:FIG) and Centerbridge Partners for $67 dollars a share. The deal is expected to close in mid-2008. PENN is recently trading at $58.26.
Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Could it happen? Could News Corp (NYSE: NWS) pull its offer? It could, and the fear is absolutely there. That's why the stock has fallen. For one, the Bancroft family, which controls the majority of Dow Jones' shares, hasn't formally accepted Rupert Murdoch's $5 billion, $60 a share offer. And no one else has come forward with a competing bid. But it does seem that both sides are moving together in the same direction. Okay, but somebody should make up their mind -- either way -- and stop fiddling around.
Barry Diller is back at it. The chairman and CEO of IAC/InteractiveCorp, who is also chairman of the board and a senior advisor to Expedia, is working to take online travel firm private at $30 a share. Part of any deal will involve Expedia's TripAdvisor being spun off, with about 400 jobs being lost in that shuffle.
After many, many laps around the track, this race is over, as race track and casino operator Penn agreed to be acquired today by Fortress Investment Group LLC (NYSE: FIG) and private equity firm Centerbridge Partners. All cash, baby, in a deal worth $8.9 billion that includes $2.8 billion of assumed debt. Everyone to the Winner's Circle.
Ironically enough, now Penn has decided to go private. The deal is valued at about $5.73 billion and the buyers include Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners LP. There will also be a repayment of $2.8 billion in existing debt.
While casinos generate lots of cash flows, it's still not easy to pull off a buyout deal. A big problem is dealing with the mind-numbingly complex gambling laws. In other words, it should take at least a year to close the Penn transaction.
Although, at 10 times EBITDA, the deal has a reasonable valuation.
On the news of the transaction, Penn's stock climbed 21.92% to $62.35. The buyout offer is $67.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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