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One problem: Penn and Pinnacle officials shot down the idea.
"We're focused on moving the company forward," Pinnacle interim Chairman Richard Goeglein said. "We are not interested in merging, selling or doing anything of that nature."
Penn National Chairman Peter Carlino said in an interview last month with the Review-Journal he had zero interest in buying Pinnacle. At the time, Penn was making a lowball bid to acquire the bankrupt Fontainebleau, an offer that corporate raider Carl Icahn has since topped.
Last week, Union Gaming Group principal Bill Lerner, in a research note to the firm's clients, suggested that it made tactical sense for Penn National to acquire Pinnacle to gain control of strategic assets in Indiana, Louisiana, Missouri and a casino site in Atlantic City.
Lerner made a case for Penn spending $15 a share for Pinnacle, a 42 percent premium over the company's current stock price.
"There are a handful of strategically sensible reasons to justify an acquisition of Pinnacle by Penn in our view, while a deal would be relevant to properties representing roughly 60 percent of Penn's cash flow," Lerner said.
Penn National has a balance sheet with about $1.6 billion in liquidity, which the company wants to use to buy a Strip casino. Acquiring Pinnacle doesn't seem to mesh with the corporate focus.
A source said Penn executives believe Texas will eventually legalize casinos, removing an important customer base for Pinnacle's flagship casino in Lake Charles, La., about four hours east of Houston.
Goeglein, a veteran gaming executive who joined Pinnacle's board in 2003, said the company has a bright future, especially in Louisiana.
Pinnacle is moving ahead with a second casino in Lake Charles and a project in Baton Rouge. A second company casino in St. Louis will open next spring.
The board's primary attention is on finding a replacement for Dan Lee, who resigned Nov. 7. Goeglein said there is a rich applicant pool, including people familiar with the business model.
Former Hilton Gaming President and board member John Giovenco is interim CEO and is not interested in assuming the role permanently.
"Our senior management team is still in place, and they have worked together for several years," Goeglein said. "It's business as usual, and we're moving forward.
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