Penn buys gaming company for cash

CHARLESTON, W.Va. – Penn National Gaming Inc. is acquiring Argosy Gaming Co. for $1.4 billion cash, making it the nation’s third-largest operator of gambling properties.

Penn National is the designated developer of the racino at Bangor Raceway.

Based in Wyomissing, Pa., Penn National said Wednesday it will pay $47 per share for Argosy stock – a 15 percent premium to Argosy’s closing price of $40.75 per share before the deal was announced. Penn National will also assume $805 million of Argosy’s debt.

If the deal is approved by regulators and Argosy stockholders, Penn National would have more than $2 billion in annual revenues, more than 20,000 slot machines and about 700,000 square feet of casino space at 13 properties. Only MGM-Mirage Inc. and Harrah’s Entertainment Inc. would be larger.

Penn National CEO Peter M. Carlino said the merger gives his company a presence in nearly every regional gambling market. The company owns a West Virginia racetrack and casino as well as properties in Mississippi, Louisiana, Colorado and Illinois.

Argosy, based in Alton, Ill., owns and operates casinos in Illinois, Missouri, Louisiana, Iowa and Indiana. It reported net revenues of about $1 billion for the 12 months ending Sept. 30 and earnings before interest, taxes and depreciation of $260 million.

The deal would double Penn National’s revenues and gives the company the ability to further diversify.