Penn National Gaming to Acquire Argosy Gaming Company Creating Nation's Third Largest Casino Operator

WYOMISSING, Pa. & ALTON, Ill.--(BUSINESS WIRE)---- Penn National Gaming, Inc. (Nasdaq:PENN) and Argosy Gaming Company (NYSE:AGY) announced today that their boards of directors have unanimously approved a definitive merger agreement under which Penn National will acquire all of the outstanding shares of Argosy Gaming for $47.00. The all-cash price of $47.00 per share represents an approximate 16% premium over the closing share price of Argosy Gaming on November 2, and an approximate 30% premium over the average closing share price of Argosy Gaming over the past ninety days. The transaction is valued at approximately $2.2 billion, including approximately $805 million of long-term debt of Argosy Gaming and its subsidiaries. Upon closing, the transaction is expected to be immediately accretive to Penn National's earnings per share.

The combined company will be the third largest operator of gaming properties in the U.S. with annual revenue in excess of $2 billion, over 20,000 slot machines, and approximately 700,000 square feet of casino space. Upon completion of the transaction, and reflecting previously announced divestitures, acquisitions and projects under development, Penn National will own thirteen gaming facilities; four pari-mutuel horse racing facilities and seven off-track wagering sites; a 50% interest in a fifth pari-mutuel horse racing facility; and hold a management contract for a casino in Canada.

For the twelve months ended September 30, 2004, Argosy Gaming generated net revenues of approximately $1 billion and EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $260 million. The value of the transaction represents a multiple of approximately 8.5 times Argosy's EBITDA for the twelve month period ended September 30, 2004.

Commenting on the transaction, Peter M. Carlino, Chairman and Chief Executive Officer of Penn National, said, "This is an extraordinarily powerful combination that creates the nation's third largest operator of gaming properties with a presence in nearly every major regional gaming market. This transaction will enable us to further broaden our revenue base and diversify our cash flow by jurisdiction and by property. Argosy's properties are quite similar to our own and our operating strategies are also consistent. Both companies have excellent, long-term records of growth, both are multi-jurisdictional operators of high-quality regional gaming properties with a strong emphasis on slots, and both entities have proven their ability to identify growth and expansion opportunities which create exciting entertainment destinations and value for shareholders.

"The acquisition of these well-established properties represents another significant growth and expansion opportunity for Penn National and is attractive both strategically and financially. The acquisition, which essentially doubles our revenue and EBITDA, is expected to be immediately accretive to our operating results upon closing, builds critical mass for our gaming operations and provides in-market opportunities in several regions while further diversifying our geographic reach to three new markets. The combined entity will benefit from a broader, deeper base of properties and management and will generate significant free cash flow available for debt reduction and further investment in our portfolio of properties.

"Argosy shares a common vision for growth with Penn National as both organizations have several visible near-term growth and development projects. Argosy's recently-announced acquisition of Raceway Park in Ohio and new expansions in Sioux City, Riverside and Lawrenceburg, like our own expansion and development projects underway or about to be commenced at Penn National Race Course, Bangor Historic Track and Charles Town Races, are all exciting investments that we expect will deliver superior results. As with past acquisitions, we intend to blend the successful operating and management disciplines of both companies to generate improved financial performance over prior year periods. Additionally, Penn National expects to achieve approximately $20 million in corporate cost savings within the first year of closing the transaction."

"This is the right transaction for Argosy Gaming and its shareholders and we are delighted to be joining Penn National," said Richard J. Glasier, President and Chief Executive Officer of Argosy Gaming Company. "We believe this transaction delivers premium value to our shareholders and will create increased opportunities for our employees. We are confident that our properties will continue to generate impressive operating results as part of the Penn National platform. We are committed to completing the transaction as expeditiously as possible and ensuring a seamless transition."