The biggest private-equity firm in the world – Blackstone Group LP has reached an agreement with Deutsche Bank AG over the acquisition of the Cosmopolitan Resort. The all-cash deal is estimated to 1.73 billion dollars. Recently the resort has been having financial difficulties, which costed Deutsche Bank about 4 billion dollars – first paid as a lender and then as an owner of Cosmopolitan.
On the other hand, Deutsche Bank AG, which is the largest bank on the territory of Germany, has never considered entering the casino business before it got the unfinished property in January 2008 when giving a construction loan that amounted to more than 700 million dollars. Now it is focused on selling of assets that are not considered as major ones.
The head of the non-core operation unit of Deutsche Bank – Mr. Pius Sprenger said in a statement, which was cited by Bloomberg: “The bank is committed to reducing its non-core legacy positions in a capital-efficient manner which benefits shareholders.”
Cosmopolitan Resort was built at a price of more than 3.9 billion dollars. However, it did not turn out profitable since its opening in December 2010, due to the fact that tourism industry in the U.S. was strongly affected by the 2008 financial crisis. The resort posted net losses estimated to about 100 million dollars per year since 2010.
With the acquisition of Cosmopolitan Resort, Blackstone Group LP is now making its first major step in casino investments, after the 347-million-dollar purchase of the Hughes Center office complex in Las Vegas in 2013. The private-equity firm competed with several other bidders for the deal, which is supposed to help it expand its reach in the hospitality sector over the coming years.
Mr. Tyler Henritze, who is a senior managing director of Blackstone Group made an e-mailed statement, which was cited by Bloomberg: “We are excited to join with the Cosmopolitan and work with its employees and management in the next phase of its evolution. s a significant investor in the hospitality sector, Blackstone recognizes the value and potential in the Cosmopolitan and Las Vegas and looks forward to working to build on the success to date.”
Blackstone Group LP was 1.82% down to close at 29.07 dollars per share yesterday, marking a one-year change of +28.40%. According to the information published on CNN Money, the 17 analysts offering 12-month price forecasts for Blackstone Group LP have a median target of 38.00, with a high estimate of 44.00 and a low estimate of 35.00. The median estimate represents a +30.72% increase from the last price of 29.07.
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