Casino operator Penn Gaming announced this morning that it has terminated its proposed $6.1 billion buyout with Fortress Investments and Centerbridge Partners. We’ll have much more on this as the day progresses, but a couple quick reactions:
1. This is very surprising. Penn Gaming and its suitors have gone through regulatory hell to get this thing done, and it seems like they’re quitting with the finish line in sight.
2. Fortress and Centerbridge have agreed to pay the breakup fee, and also to buy around $1.25 billion in Penn Gaming debt. That means Penn Gaming made out better in the deal than other companies in its predicament (read: Huntsman). On the other hand, who actually pays the breakup fee? Will Fortress and Centerbridge hit up their LPs, or will they sue the banks (you know, the folks who actually threatened to renege on their agreement)?
3. This leaves BCE as the only mega-buyout that is not closed, closing, dead or dying. It will soon be in one of those categories, and this Penn Gaming news cannot be sitting well north of the border (unless you’re a disgruntled BCE bondholder).