Penn National Gaming Pockets $1.475 Billion On Cancelled Buyout

The $6.1 billion leveraged buyout of Penn National Gaming by Fortress Investment Group and Centerbridge Partners has been cancelled. Penn will receive $225 million in cash from the termination fee. Additionally, the company will receive $1.25 billion from the purchase of Penn's redeemable preferred equity by Fortress, Centerbridge, Wachovia and Deutsche Bank.

The company said in a statement that the proposed transaction could not be completed without significant litigation. It went on to say that "A re-negotiated, reduced purchase price was not a viable option." Perhaps everyone involved read Monday's cover story in the Wall Street Journal entitled "Debt-Laden Casinos Squeezed by Slowdown". Actually, they didn't even need to read the story. Just the headline was enough to cause them to scrap the planned deal. Furthermore,the headline must have scared Penn so much that the company plans to use the termination fee to pay off debt. Penn National's CEO Peter Carlino expressed disappointment that the company's shareholders would not receive $67 a share from the merger. However, he stated "We may be in the gaming business, but we would never gamble the Company's future." Clever Man.