Penn National Gaming to receive $1.475 billion after terminating deal with PNG

By Lisa Kerner

Charlotte, N.C., July 3 - Penn National Gaming, Inc. agreed to terminate its merger agreement with PNG Acquisition Co., Inc., an entity indirectly owned by funds managed by affiliates of Fortress Investment Group LLC and Centerbridge Partners, LP.

In connection with the termination, Penn National said it will receive $1.475 billion, consisting of a $225 million cash termination fee and the purchase of $1.25 billion of Penn National's redeemable preferred equity due 2015, by affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia and affiliates of Deutsche Bank.

Penn National's board of directors determined that the likelihood of completing the merger was highly unlikely due to remaining regulatory approvals, credit facility conditions and probable litigation, according to a company news release.

"We are extremely disappointed that the company's shareholders will not receive the $67 per share merger consideration," Penn National chief executive officer Peter M. Carlino said in the release.

"Our decision to enter into the agreements announced today follows a thorough evaluation of a wide range of alternatives for consummating the transaction," Carlino added.

Penn National, a Wyomissing, Pa., gaming and racing company, had exercised its option to extend the end date for completing its leveraged buyout to Oct. 13 from June 15, it was previously reported. The company's shareholders approved the $8.9 billion transaction in December 2007.

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