Penn National Gaming (NASDAQ: PENN - option chain) shares are rising today after voters in Ohio approved ballot measures to allow casinos in four cities in the state. PENN lobbied heavily in favor of the measure and will build two of the casinos, in Toledo and Columbus, which are scheduled to open in 2012. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on PENN.

PENN opened this morning at $27.49. So far today the stock has hit a low of $27.49 and a high of $28.88. As of 11:40, PENN is trading at $28.32 up $2.12 (8.1%). The chart for PENN looks bearish and S&P does not currently have a STARS rating for PENN.

Think it's good to be a CEO? It's not bad to run a non profit organization either. There is the satisfaction of doing right by your fellow man. Plus, there is the salary, on average $150,000, according to GuideStar. Though those salaries are not in the same league as Fortune 500 CEOs, they are far in excess of what most people earn. In these tough economic times when charitable giving is plunging and endowments are drying up, these compensation plans deserve additional scrutiny.

For instance, Abraham H. Foxman and Rabbi Marvin Hier, two of the best-known leaders in the Jewish community, are each being paid more than $600,000, according to filings with Internal Revenue Service from 2006, the latest figures available. Both work two part-time jobs.

Foxman is listed as working 27 hours as ADL's National Director. In addition, Foxman also serves as a trustee of the Anti-Defamation League Foundation, a job which he devotes 13 hours per week for a salary of more than $163,000.

The Simon Wiesenthal Center, which Hier co-founded in 1977, takes only 24 hours of his time to run. For his time, he received $241,269. The balance of his $691,000 in salary and benefits comes from the Museum of Tolerance. Moreover, Hier's wife Marlene has a six-figure job and his sons work at the organization as well. More than $1 million worth of business has been done between the organizations and either companies owned by the board of directors or relatives or board members.

Analyst upgrades:

• Baird upgraded Fifth Third Bancorp (NASDAQ: FITB), SunTrust (NYSE: STI) and Wells Fargo (NYSE: WFC) to Outperform from Neutral citing the ability to raise cheap capital following the Treasury's aggressive policy response.
  
• Keefe Bruyette upgraded First Security Group (NASDAQ: FSGI), Amcore Financial (NASDAQ: AMFI) and Seacoast Banking (NASDAQ: SBCF) to Outperform from Market Perform to reflect the benefits of the government's TARP program.
  
• Suntrust believes Zions Bancorp (NASDAQ: ZION) is disproportionately positioned to benefit from what should be a wave of industry fallout and consolidation over the next few years. Shares were upgraded to Buy from Neutral.
• Cadbury (NYSE: CBY) was raised to Hold from Sell at ING Group.
  
• Ericsson (NASDAQ: ERIC) was raised to Neutral from Sell at Goldman.
  
• Genentech (NYSE: DNA) was upgraded at Piper Jaffray to Buy from Neutral.

Analyst downgrades:

MOST NOTEWORTHY: SuccessFactors, Taleo and Penn National were today's noteworthy initiations:

• Oppenheimer initiated SuccessFactors Inc (NASDAQ: SFSF) with an Outperform rating and $15 target. The firm believes the company's double-digit revenue growth will continue as its differentiated HCM solutions gain broad-based adoption. Deutsche Bank believes the company has a strong opportunity to build a highly profitable business as it broadens its footprint, and started shares with a Buy rating and $15 target.
• Deutsche Bank also reinstated coverage of Taleo Corporation (NASDAQ: TLEO) with a Buy rating and $35 target. The firm believes the Vurv acquisition will create significant accretion in 2009 and that investors should take advantage of the recent share weakness.
• Oppenheimer assumed coverage of Penn National Gaming Inc (NASDAQ: PENN) with an Outperform rating and believes the termination of Penn's acquisition by Fortress Investment and Centerbridge will be catalysts for the stock, as they think it provides the company with financial flexibility. In addition, the firm believes Penn's management team has historically made prudent capital decisions.

OTHER INITIATIONS:

• Petrobras Brasileiro SA (NYSE: PBR) was initiated with a Buy rating and $92 target at Goldman.
• Cowen resumed coverage of LeMaitre Vascular Inc (NASDAQ: LMAT) with an Outperform rating.
• Sanofi-Aventis SA (NYSE: SNY) was started at ING with a Hold rating.

This week, we've seen two major buyout deals come undone: the $6.1 transaction for Penn National Gaming Inc. (NASDAQ: PENN) and TPG's play for Bradford & Bingley. In fact, according to FactSet Research, about 20% of leveraged buyouts (LBOs) since mid-2007 have been terminated.

Despite all this, some deals are getting done. Perhaps the most notable is the BCE (NYSE: BCE) LBO. BCE has reached an agreement with its private equity sponsors and banks to close its $51 billion LBO. This will represent the biggest buyout in history.

Now, there are some wrinkles. The closing date will be extended to December and there will not be any dividend payments for the rest of the year. The break-up fee was also upped from $1 billion to $1.2 billion.

Yet, the fact is that the price tag will remain unchanged (at $42 per share). No doubt, this is a big feat, especially in light of the credit crunch.

Apparently, there was much discussion about renegotiating the price. Then again, the prospects of massive litigation were daunting, as we have seen in a variety of other deals such as with Clear Channel, SLM (NYSE: SLM) and Huntsman Corp. (NYSE: HUN).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Today was a good end to a strange trading week, while many shares had light volume with today's half-day trading session. Non-Farm payrolls declined worse than expected to 62,000, and May was revised higher to 62,000 jobs lost as well. The ISM non-Manufacturing came in again under 50 at a very weak 48.2, signaling growth isn't back to being close to the table. The dollar traders were probably less than thankful after the European Central Bank raised its overnight rates and as oil neared $146.00 per barrel intra-day. These are today's unofficial closing bell levels:

• DJIA 11,288.79 (+72.79)
• S&P500 1,262.88 (+1.36)
• NASDAQ 2,245.38 (-6.08)
• 10YR T-Note 3.963% (+0.004%)
• 52-Week Lows
• Top Analyst Calls

We actually handed an award to analysts for a tie in the Worst Analyst Calls of the Week. They were that late.

Abbott Labs (NYSE: ABT) saw a rise of almost 1% to $54.75 after the FDA approved its XIENCE drug eluting stent.

NVIDIA (NASDAQ: NVDA) saw a horrific drop after the company's earnings warnings. This is what happens when your new product fails enough that it increased the severity. Shares were down 30% at $12.49 at the close.

Penn National Gaming (NASDAQ: PENN) actually rose despite the merger finally being called off. We knew this was coming. Shares closed up 3.7% at $29.66 today.

Have a great weekend, and remember markets are closed Friday in observance of the July 4 holiday.

Jon C. Ogg

MAJOR PAPERS:

• Barnes & Noble Inc (NYSE: BKS) is considering a bid for rival bookseller Borders Group Inc (NYSE: BGP), the Wall Street Journal reported, a move which would allow Barnes & Noble to improve profits and reduce costs. Antitrust issues could prevent a deal.
• The Wall Street Journal also reported that Carl Icahn's effort to remove Yahoo! Inc's (NASDAQ: YHOO) board has picked up new supporters, including T. Boone Pickens, who acquired a 0.75% stake. Some Yahoo shareholders believe it is still too early to predict whether Icahn will be able to carry July 3's shareholder vote.
• A Financial Times investigation discovered that Moody's Corporation (NYSE: MCO) incorrectly awarded top ratings to billions of dollars to debt products due to an error in its computer models. Moody's said it is in the process of "conducting a thorough review" of the rating of the constant proportion debt obligations, which should have been up to four notches lower.

OTHER PAPERS:

• According to the people briefed on the matter, the New York Times reported that the buyout of Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group (FIG) and Centerbridge Parters may involve revised terms. The sources said the negotiations may "delay or even imperil" the deal.

Expect big moves in Mountaineer Gaming (NASDAQ: MNTG) and Penn National Gaming (Nasdaq: PENN) in the next few weeks, specifically August 11, when residents in West Virginia's largest county are expected to vote on a proposal to allow table games at a racetrack in West Virginia. The dilemma between social responsibility and economic progress is constantly present in many industries. Like usual for gambling expansion proposals, the dissenters on the idea are primarily religious groups.

While I understand the arguments that gambling is not a good thing as it seems pretty undeniable, in my mind, I have typically stood on the pro-expansion side of the fence when issues like this surface. While I have several reasons for this, I believe the most important factor to consider is that many people gamble illegally. This can include anything from underground cardrooms to online gambling, but it does happen. And, in my opinion, it makes more sense to be able to tax and police this gambling activity (via regulated casinos, etc.) than to let it flourish unregulated and not taxed.

How should investors play Mountaineer Gaming and Penn National Gaming? Well, both stocks have had huge run ups in recent months. Therefore, I believe that if the proposal is accepted, upside is probably minimal as the potential upside is "priced in." However, if the proposal is rejected look out below - both stocks will sell-off very sharply because traders who have purchased the stock in recent times to benefit from the bill will quickly move on.

Trump Entertainment Resorts Inc (NASDAQ: TRMP), Donald Trump's casino company, this morning said that following a three-month search, it would conclude its strategic review. Although it has held talks since March with groups of investors that included former Trump Taj Mahal manager Dennis Gomes and Boyd Gaming Corporation (NYSE: BYD), the company said the offers it has received "weren't likely to lead to a transaction."

It seems a little strange that Trump Entertainment couldn't find a buyer, particularly because the market for casinos and their assets is hot. Recent examples of casino sector activity include the in-process $17B acquisition of Harrah's Entertainment Inc (NYSE: HET) and the announced $6.1B acquisition of casino and racetrack operator Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group LLC (NYSE: FIG), a U.S. hedge fund and private-equity firm.

What gives? Why hasn't Trump found a buyer? Sources have speculated that its casinos, located in Atlantic City, NJ, have been struggling in comparisons to Las Vegas "entertainment destinations," a partial smoking ban and competition from new gaming venues in Pennsylvania and New York. Additionally, the announcement that the company would end its efforts to sell comes weeks after CEO James Perry said he would retire and, effective yesterday, would be replaced by COO Mark Juliano.

Trump's Atlantic City casinos are still working on a $250M project to update its gaming floors and add new restaurants, although it hasn't seemed to help. The company posted losses in earnings per share loss and revenue when it reported Q1 results in May. The Trump Taj Mahal Casino Resort, its largest casino, with 786 rooms, is set to open next summer.

The casino company said that while it was ending the initiative to sell the company, it would continue to review other strategic alternatives, including a cost cutting effort. The company laid off Chief Information Officer Virginia McDowell and executive vice president of design and construction, Paul Keller. It doesn't plan to fill these positions.

Trump shares fell nearly 18% this morning.

Late last year, Penn National Gaming (NASDAQ: PENN) tried to buy Harrah's (NYSE: HET). But, in the end, private equity firms TPG and Apollo Management won the deal.

Ironically enough, now Penn has decided to go private. The deal is valued at about $5.73 billion and the buyers include Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners LP. There will also be a repayment of $2.8 billion in existing debt.

While casinos generate lots of cash flows, it's still not easy to pull off a buyout deal. A big problem is dealing with the mind-numbingly complex gambling laws. In other words, it should take at least a year to close the Penn transaction.

Although, at 10 times EBITDA, the deal has a reasonable valuation.

On the news of the transaction, Penn's stock climbed 21.92% to $62.35. The buyout offer is $67.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

DOW JONES & COMPANY (NYSE: DJ)

Could it happen? Could News Corporation (NYSE: NWS) pull its offer? They could, and the fear is absolutely there. That's why the stock has fallen. For one, the Bancroft family, which controls the majority of Dow Jones' shares, hasn't formally accepted Rupert Murdoch's $5B, $60 a share offer. And no one else has come forward with a competing bid. But it does seem that both sides are moving together in the same direction. Okay, but somebody should make up their mind -- either way -- and stop fiddling around.

EXPEDIA INC (NASDAQ: EXPE), IAC/INTERACTIVECORP (NASDAQ: IACI)

Barry Diller is back at it. The chairman and CEO of IAC/InteractiveCorp, who is also chairman of the board and a senior advisor to Expedia, is working to take online travel firm Expedia private at $30 a share. Part of any deal will involve Expedia's TripAdvisor being spun off with about 400 jobs being lost in that shuffle.

PENN NATIONAL GAMING INC (NASDAQ: PENN)

After many, many laps around the track, this race is over, as race track and casino operator Penn agreed to be acquired today by Fortress Investment Group LLC (NYSE: FIG) and private equity firm Centerbridge Partners. All cash, baby, in a deal worth $8.9B that includes $2.8B of assumed debt. Everyone to the Winner's Circle.

MOST NOTEWORTHY: Airtran Holdings Inc (NYSE: AAI), UAL Corporation (NASDAQ: UAUA) and the REIT sector were today's noteworthy downgrades:

• Calyon downgraded shares of Airtran Holdings to Neutral from Add, citing concerns with AAI's yield trends.
• The firm also downgraded shares of UAL Corp to Add from Buy based on higher fuel prices and slightly weaker-than-expected RASM increases.
• Stifel downgraded the REIT Sector citing rising interest rates and mutual fund outflows, among other reasons. Companies that include Cedar Shopping Centers Inc (NYSE: CDR), Kimco Realty Corporation (NYSE: KIM), Kite Realty Group Trust (NYSE: KRG), Ramco-Gershenson Properties Trust (NYSE: RPT), Simon Property Group Inc (NYSE: SPG) and Tanger Factory Outlet Centers Inc (NYSE: SKT) were downgraded to Hold from Buy.

OTHER DOWNGRADES:

• Morgan Joseph downgraded shares of Penn National Gaming Inc (NASDAQ: PENN) to Hold from Buy on valuation.
• CBOT Holdings Inc (NYSE: BOT) was downgraded to Neutral from Outperform at Credit Suisse.
• JP Morgan downgraded shares of Netflix Inc (NASDAQ: NFLX) to Underweight from Neutral, as the firm believes the company's growth will be impacted by Blockbuster Inc's (NYSE: BBI) Total Access offer.

MOST NOTEWORTHY: Embarq Corp (EQ) and Boston Scientific Corp (BSX) were today's most notable downgrades:

• Goldman Sachs downgraded Embarq Corp (NYSE: EQ) to Sell from Neutral based on valuation and potential margin dilution.

• Boston Scientific Corp (NYSE: BSX) was downgraded to Peer Perform from Outperform at Bear Stearns based on regulatory and competitive challenges.

OTHER DOWNGRADES:

• Despite expectations of strong Q4 results and 2007 guidance, Needham downgraded Garmin Ltd (NASDAQ: GRMN) to Hold from Buy based on valuation, as they believe the multiple the market is willing to give the stock is likely to decline as PNDs continue to increase as a percentage of revenue.

• Roth Capital downgraded China BAK Battery Inc (NASDAQ: CBAK) to Hold from Buy.

• DA Davidson downgraded Weyerhaeuser Co (NYSE: WY) to Neutral from Buy.

• BMO Capital Markets downgraded Brady Corp (NYSE: BRC) to Market Perform from Outperform.

• Wachovia downgraded Boyd Gaming Corp (NYSE: BYD) to Market Perform from Outperform, expecting weakness in 2007 from the Las Vegas locals market and Atlantic City.

• Penn National Gaming Inc (NASDAQ: PENN) was downgraded to Hold from Buy at Deutsche Bank citing valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Roche Holdings AG (RHHBY), US Steel Corp (X) and Penn National Gaming (PENN) topped today's list of most notable downgrades:

• Bear Sterns downgraded Roche Holdings AG (OTC: RHHBY), to Peer Perform from Outperform after they lowered estimates to reflect higher taxes, slowing pharmaceutical sales, increased payments to third-party groups and reduced diagnostics profitability. Bernstein also downgraded Roche to Market Perform from Outperform.

• CIBC downgraded U.S. Steel Corp (NYSE: X) to Sector Performer from Sector Outperformer based on valuation. Bank of America also downgraded shares to Neutral from Buy with a $90 target citing the good news is reflected in the valuation.

• Penn National Gaming (NASDAQ: PENN) was downgraded to Hold from Buy on valuation with a $48.50 target.

OTHER DOWNGRADES:

• Silicon Image Inc (NASDAQ: SIMG) was downgraded to Underperform from Hold with a $7.50 target at Jefferies to reflect slow 1.3 HDMI adoption, aggressive 2007 guidance and deteriorating ASPs and margins; the firm recommends investors sell the stock. Silicon Image was also downgraded to Hold from Buy at Stanford and Needham, to Sector Performer from Outperformer at CIBC and to Neutral from Buy at DA Davidson.

• Spectrum Brands Inc (NYSE: SPC) was downgraded to Underweight from Neutral with a $7 target at Prudential following the company's disappointing first quarter results.

• Bear Stearns downgraded Forward Air Corp (NASDAQ: FWRD) to Underperform from Peer Perform.

• AG Edwards downgraded Callaway Golf Corp (NYSE: ELY) to Hold from Buy on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: The Gaming sector and CBS Corp (CBS) were the most notable companies on today's initiation list.

• Prudential initiated the Gaming sector with a Favorable rating,
  
• They initiated Boyd Gaming Corp (NYSE: BYD), Town Sports International Holdings (NASDAQ: CLUB), Penn National Gaming (NASDAQ: PENN), Shuffle Master Inc (NASDAQ: SHFL), Steiner Leisure Ltd (NASDAQ: STNR) and Great Wolf Resorts Inc (NASDAQ: WOLF) with Outperform ratings.
  
• Ameristar Casinos Inc (NASDAQ: ASCA), MGM Mirage (NYSE: MGM) and WMS Industries Inc (NYSE: WMS) were initiated with Neutral ratings.
• Underweight ratings were given to International Game Tech (NYSE: IGT), Isle of Capri Casinos Inc (NASDAQ: ISLE), Life Time Fitness Inc (NYSE: LTM), Pinnacle Entertainment Inc (NYSE: PNK) and Trump Entertainment Resorts Inc (NASDAQ: TRMP).

• UBS initiated CBS Corp (NYSE: CBS) with a Buy rating and $38 target, citing valuation, dividends and buybacks.

OTHER INITIATIONS:

• Nollenberger believes International Rectifier Corp (NYSE: IRF) is the way to play the trend for energy efficiency, initiating the company with a Buy rating and $60 target.

• Goldman Sachs resumed coverage of AT&T Inc (NYSE: T) with a Buy rating and Level 3 Communications inc (NASDAQ: LVLT) with a Neutral rating.

• Stanford started EDO Corp (NYSE: EDO) with a Hold rating and $25 target; the firm believes EDO can be a turnaround story in 2007, but they recommend investors to stay on the sidelines until after Q4 earnings given their concerns over the quarter and guidance.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).