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Penn National Gaming Inc. Message Board

  • i_bet_the_farm i_bet_the_farm Jul 27, 2007 8:41 AM Flag

    IMHO, the deal is dead

    PENN will get the $200 million, and life will go on as always.

    Hopefully, they keep their eyes on the ball and don't let this distraction hurt operations.

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    • That my friend would be a great outcome. In a few years, $67 will look like peanuts - and we can get a fair offer for this company. Until 2009 you will be hoodwinked my present management. Either way - if you buy now, you win.

    • That $200 million will go a long way, if it turns out that way. They can use it to pay down debt. They also had costs associated with this merger agreement, so it will be less than $200MM or around 2.50 per share.
      However, I think there's still a good chance the deal will go through. Here are my reasons:
      1) 11- 15 months is a long time for a deal to happen. The buyers can sit on it for awhile and see if market conditions improve.
      2) $200 MM isn't chump change, unless Penn is currently worth considerably less. Remember, Penn expects to earn around $2 in the next year, so that bottom line earnings is built into the payment.
      3) Leaving a deal would hurt Fortress' reputation. They are one of the largest private equity firms and they're only as good as their last deal. They have the financing in place, so they'd have to come up with a good reason.
      4)Casino business is growing and is somewhat recession-resistant.
      5) Real estate is valued as it works for operations. It's not like residential real estate. As long as Penn occupies it and drives revenues out of the casinos, Fortress can get good collateral through conventional bank financing.
      6) This type of private equity deal may make more sense than others in the current environment, so it might make good business sense to consummate the deal.

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