Volume Spike Investor

Penn National Gaming Inc. (NASDAQ: PENN) has tripped over the volume surge wires this morning on aggressive downward volume.  The sad part is that there is no real news out on the company.  But the obvious tie is that this is a large merger with a huge arbitrage spread for a private equity acquisition.  After Huntsman Corp. (NYSE: HUN) was notified that its buyout from mid-2007 was going to be terminated, traders are killing the other pending private equity mergers that have been on the books forever.  Penn National has a $3.5 Billion market cap with a $40.21 share price (after a 6.7% drop as of 1:11 PM EST).  The original private equity deal was a $67.00 cash buyout from Fortress/Centerbridge.  Whether or not this merger is consummated at all is a real question, and the obvious answer is that if the deal does get done it will be for far less than that $67 buyout.

We have even seen a surge in the $40.00 JUN08 PUTS, which expire tomorrow.

Avg. Daily Volume:  860,000 shares per day

52-Week Range:     $38.35 to $63.45

OPTIONS:                YES

Jon Ogg
June 19, 2008