What's really changed

Implications: Penn National Gamings Board of Directors has made the decision not to allow the private equity firms to re-price their offer

Analysis: Penn National Gaming will be staying public, at least in the short-term due purely to the credit and stock market situation. Let's take a close look at Penn National's gaming markets and what is ocurring in those markets relative to when the original offer was received. Basically, Charlestown is doing just fine (flat ebotda year over year in a tough economy, 1st qtr 2008), Lawrenceburg is only down slightly while the Illinois properties are all disasters due to the the no-smoking ban invoked by the legislature, hardly Penn's fault. their other properties in Iowa, Mississippi and even Maine held up fairly well and with an expansion in Maine should do fine. I have opined in the past, that i think the regional markets will hold up better than the destination markets and thus far that appears to be correct. Penn has opened their slots at the track property in Pa. and the numbers look pretty good and so this actually will be a further catalyst of improved financials. So, why did the deal go south? Well, first, it appears that the Penn Board did not want to discuss any lesser price than the original 67 a share (pretty gutsy considering the stock is in the 20's). Second, it is obvious to everyone that the credit markets stink and so this deal was shaky for awhile at the current 67 price. Finally, the stock is being unduly punished by people who have not looked at penns outstanding fundamentals, a good management team, good properties in good markets and a decent development plan. I still believe that Penn and Ameristar are 2 fairly good investments at current prices as they operate in regional markets and do it well. It also appears that Penn will enter the a/c market and with the experience of their senior management in the market previously, they should be extremely competitive. I will admit that I thought a mid to low 50's stock price sale would be the final outcome but obviously I was wrong on this one!