Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Penn Gaming: The Hunted Becomes the Hunter?

By

Company now on the prowl for Las Vegas Sands', MGM's assets.

PrintPRINT
In mid-June 2007, shares of Penn National Gaming (PENN) were riding high, and existing shareholders were surely seeing triple 777s, thanks to a takeover offer from 2 private-equity firms - Centerbridge Partners and Fortress Investment Group.

After all, the firms were to pony up some $67 a share for the Pennsylvania-based gaming company. A New York Times article points out that the offer represented a more-than-30% premium for the shares.

But then the bottom fell out. In July 2008, the deal was nixed.

The news of the squashed deal wasn't all bad, however; Penn was left with a little somethin' somethin'. A press release at the time said that :

"In connection with the termination of the merger agreement, Penn National Gaming will receive $1.475 billion, which will consist of a $225 million cash termination fee and the purchase of $1.25 billion of Penn National Gaming's redeemable preferred equity due 2015, by affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia, and affiliates of Deutsche Bank (collectively 'Equity Purchasers')."

It's been reported that the hunted has become the hunter. In fact, Bloomberg disseminated an article earlier today, detailing how Penn is now on the prowl and hoping to scoop up assets of some of the bigger-name companies - hopefully on the cheap.

If you ask me, odds are Penn could be sitting in the catbird seat once the dust settles if it's able to belly up to the bar and pick up promising facilities at a cut rate.

Think about the situation. MGM Mirage (MGM) -- which is clearly one of the 800-pound gorillas of the gaming business -- is going through some difficult times, thanks to problems with its City Center project and the economy in Sin City. As a result, there's a feel that the behemoth could be unloading some of its properties.

Meanwhile, Las Vegas Sands (LVS) has seen better days. There's a chance it could end up unloading some assets, which, theoretically, Penn could pounce on.

But my bet isn't just on Penn when it comes to bottom-fishing properties. I think investors should keep an eye on Wynn (WYNN), which is headed by gaming legend Steve Wynn, who knows the gaming business (and particularly, Las Vegas) like the hair on the back of his hand. The aforementioned Bloomberg article also points out the following comments from Wynn in a past interview: "We keep a quarter of a billion in case something good comes up, we keep money on the side in addition to that."

It would be tough to muscle Wynn out of a deal if Steve has his eye on it.

WYNN has some other things going for it, including an enviable presence in Vegas and in Macau. The bulls will also point out that unlike some of its brethren, its expected to end this year and next in the black.
No position in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE