Penn National delays merger for lack of state approvals

Jun 10, 2008 7:00 PM

Industry Insider by Ray Poirier | Penn National Gaming Inc. (PENN) shares fell in trading on Monday following the company announcement that it was extending the proposed merger date from June 15 to Oct. 13.

The company noted that it still lacked five jurisdictional approvals. Final determinations from these jurisdictions couldn’t possibly be received by the June 15 closing date, the company said.

According to the merger agreement, "either party has the right to extend the end date by 120 days." This is what the company elected to do.

The agreement calls for Fortress Investment Group LLC and Centerbridge Partners L.P. to acquire Penn National Gaming for $67 per share.

During trading on Monday, the company’s shares fell $1.65 to $44.11 with nearly a million shares changing hands.

Still reviewing the merger proposals are Maine Harness Racing Commission, Indiana Gaming Commission, Illinois Gaming Board, Missouri Gaming Commission and Louisiana Gaming Control Board.

Reportedly, the Missouri regulators have indicated they will not even put the proposal on their meeting agenda until they receive a report from Fortress on whether that group is considering changing the price being offered, as has been rumored by a number of financial news sources. Also, Missouri reportedly wants an updated pro-forma financial report.

Recent credit and banking problems have caused a number of mergers and acquisitions to fail in their efforts to fund projects. Yet, there has not been any substantive indications that have surfaced indicating that this merger is in trouble. But, the PENN share price continues to trade far below the proposed offering price.