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We believe there is a high likelihood that PNK's 26.50 bid for ASCA will be topped.  As evidenced by the huge increase in PNK's stock, ASCA left a lot on the table.  MGM Resorts International or Penn Resorts could offer a higher bid for ASCA.  ASCA would be hugely accretive for MGM, given MGM's large balance of tax loss carry-forwards. They could pay 8.5x ASCA's trailing 12-month EBITDA, which would equate to a $35 bid and still make it de-leveraging and very accretive from an EPS and cash flow perspective.  PENN could offer even higher since ASCA's integration with its planned REIT structure would instantly create value.  We believe ASCA could be worth up to $40 to PENN.

INTERMEDIATE TERM (the next 3 months or more)

The stock may trade in a tight range for the next month or so. Investors are waiting to see if a higher bid from MGM, PENN, or another operator surfaces. Fundamentally, ASCA remains relatively protected from new competition and, with the top in class assets in virtually all of its jurisdictions, is a defensive play in the space. LONG-TERM (the next 3 years or less) PNK's acquisition of ASCA is expected to close by 3Q 2013. However, we believe ASCA will receive a higher bid before that deadline. A bid of at least $35 (28% premium to current price) seems reasonable and doable given the relatively small breakup fee.

LONG-TERM (the next 3 years or less)

PNK's acquisition of ASCA is expected to close by 3Q 2013. However, we believe ASCA will receive a higher bid before that deadline. A bid of at least $35 (28% premium to current price) seems reasonable and doable given the relatively small breakup fee.

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