A new deal has recently taken place: US equity firm Fortress Investment Group LLC and other investors agreed to pay $6.1 billion for Penn National Gaming (Pen National operates 18 casinos and horse racing tracks). They expect the deal to be completed before June 15, 2008. If it does not happen the per-share purchase price will rise by 1.49 cents per day. The per-share price reached $67 – it’s 31% over the expected price. Moreover, the deal also includes $2.8 billion in assumed debt.
Fortress Investment Group LLC has rivals: Boyd Gaming Corp. and Ameristar Casinos Inc. trade at multiples around 25 times projected earnings. It goes without saying, at that multiple (nearly 35 times projected earnings) there could not be another buyer but Fortress.
“Lazard advised Penn National, and Deutsche Bank and Wachovia are serving as advisers and financial sources to Fortress”.
“Two U.S. senators introduced legislation on Thursday to tax investment firms such as Fortress like corporations, making them pay a rate of up to 35 percent versus the 15 percent rate now paid by partners. Fortress and private equity firm Blackstone Group LP, with its own IPO pending, could be exempt from the new code for 5 years”.