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Penn National Close To Cosmopolitan Deal?

By Chuckmonster on Friday, 10th June 2011 4:59am
  » filed under Mergers & Acquisitions  comments: 13


The rumor mill is squeaking out word that Penn National Gaming, fresh off the closure of their purchase of M Resort, is working on a deal to purchase The Cosmopolitan of Las Vegas from owners Deutsche Bank.

Timing for this supposed deal curiously comes days after Standard & Poor's and Moody's both upgraded Penn National's stock outlook (using the parlance of the industry, from 'turdcicle on rye' to 'turdcicle arugula salad'.)

It goes without saying that pairing M with Cosmopolitan would give PENN an incredible collection of gorgeous Las Vegas resorts, both of which have barely had the cellophane taken off them. Toss both M's Anthony Marnell III and Cosmopolitan's John Unwin - two of the brightest and most forward thinking guys in the gaming business - into the deal and you may have just met the men who are going to dismantle MGM.

But haven't we heard this before? Penn National kicks the tires, bids, underbids, ruffles their feathers then walks away from doing a deal to get Bellagio, Mirage, Fontainebleau, Tropicana and who knows what else? The question isn't how much Cosmopolitan is worth, it is if Deutsche Bank is willing to write off of the enough of the project to make penny pinchers Penn National zeichen der fucking vertag!

Scanning John Unwin's Twitter shows that he has been silent since June 6th, when he told us that he was "Eatin the best Pizza!!!". He didn't even respond to the photo I sent him of A-1 Dog butts two days ago! Is four days time enough to tour the property with PENN and their CEO Peter Carlino, and fly over to Germany to meet with his Deutsche Bank overlords?

C'mon tipsters... I know someone has seen Unwin and Peter Carlino at Cosmopolitan in the last week or so? Send us a tip.


Comments & Discussion:

There's part of me that hopes this is true, considering Penn is in process of building a casino less then 5 minutes away and having a strip option to use some of those comps at Cosmo would be very welcome. However, there's a part of me that thinks that some of the perks that Cosmo offers would go away, and I wonder if I'd consider the place as special if that was the case.

If true Deutsche Bank must really be a motivated seller and willing to take a bath/have an awesome gain they need to write down. Penn National has proven its willingness to wait for the right (read: ridiculously low) price.
Penn's No. 2, COO Tim Wilmott, was formerly COO of Harrah's Entertainment (now Caesars Ent.) and, (if Chuck's cited rumor is true) would be reunited with Cosmo boss John Unwin -- the former No. 2 at Caesars Palace.
As always deals come down mostly to price so it would be premature to assess the financials. Cosmo would certainly give Penn a decent property on the Strip but I still think it would be operating at a distinct disadvantage on the gaming front against Wynn, MGM Resorts, LV Sands and Caesars. Would also be interesting to see how much operating autonomy Penn gives the savvy Tony Marnell III at M Resort and to Unwin at Cosmo.

Random thought from me:

So they're going to ship penny slot playing grandmas from middle America to the Cosmo? I am sure they'll love Marquee and the idea of Asian-Mexican fusion will go well with them.

I don't see it, the regional casino clientele is exactly the opposite of what Cosmo is trying to attract.

Your second paragraph gave me a huge laugh. Would the S&P top rating be Robuchon++?


While your criticism of "regional casino clientele" may be well-founded, Penn National did recently just ink a deal with Wynn Resorts in a sort-of strategic partnership. Not sure it gets more fancypants than Wynn, so it's not totally out of the question.

Also, a company with Marnell and Unwin on the payroll gives me a boner.

I heard the DB people were under considerable pressure to finalize worldwide real-estate losses. I still cannot fathom a price below 1.5B for Cosmo; as that would attract many other buyers including MGM. MGM has a significant incentive to buy Cosmo and they just raised money in HK. Also, Boyd has both the desire and the money to match any offers. I'm not sure Penn can really stretch to a price over 1B even if they want it. I could see some sort of marketing partnership with hopes of an eventual purchase, but not an outright purchase at this time.

Maybe I'm wrong but if I remember correctly Wynn's strategic partnership was with Pinnacle, not Penn.

Yeah, Wynn and Pinnacle announced a strategic partnership in March:

It would be great to see some competition in the land of Caesers and MGM. DB has to unload Cosmo sometime. Penn National has been a strip bridesmaid before and I hope, this time, they walk away with what might be the prettiest babe on the Strip.

Not criticizing the people at regional casinos, just seems odd that given the clientele the Cosmo has been courting that they'd do a 180 and start looking at that crowd, in the long-term they'd be better off with proven gamblers over club goers, but when you've spent tens of millions advertising for exactly the opposite and billions building a casino to attract them that you'd go against it.

They players they bring in now, dont pay the bills, they may be eating and drinking. but there no not gaming!

This could make things very interesting if it happens.

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