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Penn National Gaming, PNG Acquisition Company terminate merger agreement03/07/2008. Source: AltAssets. 
 The $6.1bn buy-out of US casino and racetrack operator Penn National Gaming is the latest victim of the credit crunch. New York-headquartered private equity firms Fortress Investment Group and Centerbridge Partners negotiated the deal shortly before the credit crisis, which also influenced the outlook for the gaming industry overall.
PNG Acquisition Company, the acquisition vehicle jointly owned by Fortress Investment Group and Centerbridge Partners, and Penn National Gaming have now officially terminated the merger agreement.
Penn National shareholders would have received $67 per share in cash. The deal would have also led to the repayment of approximately $2.8bn of the company's outstanding debt.
In connection with the termination, Penn National will receive $1.475bn, which will consist of a $225m cash termination fee and $1.25bn in redeemable preferred equity from Fortress, Centerbridge, Wachovia and Deutsche Bank.
According to a statement, 'Based on discussions between Penn National Gaming and PNG Acquisition Company, it became apparent to Penn National Gaming and its board of directors that the proposed merger transaction would not be completed without significant and lengthy litigation which is inherently unpredictable. Further, it also became apparent to the company and its board that a re-negotiated, reduced purchase price was not a viable option.'
As part of the termination agreement, Fortress chairman and CEO Wesley R Edens will be appointed to Penn National's board of directors.
Peter M Carlino, CEO of Penn National, said, 'We are extremely disappointed that the company's shareholders will not receive the $67 per share merger consideration. Our decision to enter into the agreements announced today follows a thorough evaluation of a wide range of alternatives for consummating the transaction.
'This transaction represents the company's best alternative to the uncertainty of litigation and delivers immediate tangible and material value to our stockholders,' he added.
Penn National owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The company operates nineteen facilities in fifteen jurisdictions including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario.
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