A real gamble in the making

Apr 21, 2008 8:42 PM

by Ray Poirier | Debate continues on Wall Street regarding the future of Penn National Gaming Inc. (PENN): Will the company change hands on June 15 or will the buyers, affiliates of Fortress Investment Group (FIG) and Centerbridge Partners, wriggle their way out of the offer of $67 per share.

What an opportunity for gamblers!

With credit drying up the way it has during the past few months, many investors decided the deal is a bust and have driven the price of PENN shares to the $40 level, a far cry from the offer.

They cite the litigation taking place between Clear Channel Communications and that company’s potential buyers who backed away from the deal. Some of the same financial institutions are involved in the PENN deal.

Ignored, at least in the gaming industry, were the recent buyouts of Harrah’s Entertainment Inc. (now called Caesars) and the management takeover, with partners, of Station Casinos Inc.

Supporters of Penn National say the buyout would be a bonanza but even without it the shares offer value.

Meanwhile, Penn National officials are going through the motions of getting regulators’ approvals in the various jurisdictions in which they operate. And, there hasn’t been a hint from Fortress executives that the deal will go south.

In two months, they’ll have to put up the cash or hire more lawyers.