Blackstone has agreed to buy the Cosmopolitan of Las Vegas, Deutsche Bank’s $4 billion dollar mistake. The private equity firm will pay $1.73 billion to acquire an establishment that Deutsche top executives have refused to be associated with; people go to not gamble; and in five years has never turned a profit. For those who think the deal represents a loss for DB, remember that they were just about ready to give the place away for free.
The deal will finally end a long and painful foray by Deutsche Bank into the casino business, after it foreclosed on the resort’s developer, Bruce Eichner, in January 2008. It was one of many, as banks moved to take over troubled gambling properties at the onset of the financial crisis…Deutsche Bank has held the Cosmo in a part of the bank designated for noncore operations, which it will sell over time. Earlier this year, the German firm was in talks with a number of prospective bidders, a person briefed on the matter said previously.
“As part of our Strategy 2015+, the bank is committed to reducing its non-core legacy positions in a capital efficient manner which benefits shareholders,“ Pius Sprenger, the head of Deutsche Bank’s noncore operations unit, said in a statement. “We are pleased to have agreed to this sale and to have delivered on our commitment.”