Harrah's Entertainment
To Acquire Caesars Entertainment, Create World's Largest
Distributor of Casino Entertainment
LAS VEGAS, July 15, 2004 - Harrah's Entertainment, Inc.
(NYSE:HET) has signed a definitive agreement to acquire Caesars
Entertainment, Inc. (NYSE:CZR) in a cash and stock transaction
that would be the largest in gaming-industry history.
The boards of directors of both companies
have unanimously approved the transaction, which remains subject
to approvals by Harrah's and Caesars shareholders and regulatory
agencies.
Under terms of the agreement, Caesars shareholders
will receive an aggregate of $1.8 billion in cash and 66.3
million shares of Harrah's Entertainment common stock. Caesars
shareholders will be able to elect to receive solely shares
of Harrah's common stock or cash, to the extent available.
Based on the closing price of Harrah's Entertainment
stock on July 14, 2004, the transaction would value each share
of Caesars common stock at $16.96. The total transaction value,
including assumption of Caesars debt, would be approximately
$9.44 billion.
The agreement calls for a certain number of Caesars' current
directors to join the Harrah's Entertainment board. Caesars
operates 28 casinos with about 2 million square feet of gaming
space and approximately 26,000 hotel rooms. The company has
a significant presence in Las Vegas, Atlantic City, and Mississippi
and its brands are among the most highly regarded in the gaming
industry.
Harrah's operates 28 casinos with about 1.7 million square
feet of gaming space and approximately 15,650 hotel rooms. "This
acquisition will solidify Harrah's position as the pre-eminent
distributor of casino entertainment," said Gary Loveman, Harrah's
Entertainment president and chief executive officer. "We are
adding attractive assets in stable markets with outstanding
long-term growth prospects where we have a demonstrated record
of success. Our network will also be enhanced as Caesars provides
us access to new markets and new customers, which will bolster
what is already the world's largest player-loyalty program.
"Harrah's has achieved noteworthy success by developing and
implementing capabilities across our network of properties
that increase customer loyalty and improve operating efficiency," said
Loveman. "We believe we can enhance Caesars' performance by
deploying our capabilities into its operations. We estimate
we can realize approximately $80 million of synergies in the
first full year of the acquisition, with significantly more
expected over time."
"This is an outstanding transaction for both parties," said
Stephen Bollenbach, Caesars Entertainment chairman. "Harrah's
strong leadership and operating proficiency will take Caesars'
assets to another level of performance. At the same time, the
transaction delivers excellent value to our shareholders -
including an ownership position in the world's largest and
most diversified gaming company - and significant growth opportunities
for our employees."
"We are particularly pleased to be acquiring some of the premier
properties on the Las Vegas Strip, in Atlantic City and on
the Mississippi Gulf Coast," Loveman said. "This will afford
the customers of both companies the widest range of resort
destinations offered by any gaming operator and will enhance
the casino-industry's most recognized customer-loyalty program."
The transaction represents a multiple of approximately 8.0
times analysts' estimates of Caesars' 2005 earnings before
interest, taxes, depreciation and amortization (EBITDA), before
consideration of any synergies. The transaction is expected
to close in about a year, depending on approvals by regulators
and shareholders of both companies. Harrah's expects to maintain
its investment-grade rating following the transaction.
Deutsche Bank Securities Inc. and Latham & Watkins LLP
advised Harrah's in the transaction. UBS Investment Bank and
Skadden, Arps, Slate, Meagher & Flom LLP advised Caesars.
Harrah's will host a conference call July 15, 2004, at 9 a.m.
Eastern Daylight Time to discuss the transaction. Those interested
in participating in the call should dial 1-888-399-2695, or
1-706-679-7646 for international callers, approximately 10
minutes before the call start time.
A taped replay of the conference call can be accessed at 1-800-642-1687,
or 1-706-645-9291 for international callers, beginning at noon
EDT July 15. The replay will be available through 11:59 p.m.
EDT on Wednesday, July 21. The passcode number for the replay
is 8790634.
Interested parties wanting to listen to the live conference
call on the Internet may do so on the company's web site -
www.harrahs.com - in the Investor Relations section behind
the "About Us" tab.
Founded 66 years ago, Harrah's Entertainment, Inc. owns or
manages through various subsidiaries 28 casinos in the United
States, primarily under the Harrah's brand name. Harrah's Entertainment
is focused on building loyalty and value with its valued customers
through a unique combination of great service, excellent products,
unsurpassed distribution, operational excellence and technology
leadership.
More information about Harrah's is available at www.harrahs.com.
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Caesars Entertainment, Inc. is one of the world's leading
gaming companies. With $4.5 billion in annual net revenue,
28 properties on four continents, 26,000 hotel rooms, two million
square feet of casino space and 53,000 employees, the Caesars
portfolio is among the strongest in the industry. Caesars casino
resorts operate under the Caesars, Bally's, Flamingo, Grand
Casinos, Hilton and Paris brand names. The company has its
corporate headquarters in Las Vegas. More information about
Caesars is available at www.caesars.com.
This release includes "forward-looking statements" intended
to qualify for the safe harbor from liability established by
the Private Securities Litigation Reform Act of 1995. You can
identify these statements by the fact that they do not relate
strictly to historical or current facts. These statements contain
words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue" or "pursue," or
the negative or other variations thereof or comparable terminology.
In particular, they include statements relating to, among other
things, future actions, strategies, future performance, future
financial results of Harrah's and Caesars and Harrah's anticipated
acquisition of Caesars. These forward-looking statements are
based on current expectations and projections about future
events.
Investors are cautioned that forward-looking statements are
not guarantees of future performance or results and involve
risks and uncertainties that cannot be predicted or quantified
and, consequently, the actual performance or results of Caesars
and Harrah's may differ materially from those expressed or
implied by such forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following
factors as well as other factors described from time to time
in our reports filed with the Securities and Exchange Commission
(including the sections entitled "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results
of Operations" contained therein): financial community and
rating agency perceptions of Harrah's and Caesars', the effects
of economic, credit and capital market conditions on the economy
in general, and on gaming and hotel companies in particular;
construction factors, including delays, zoning issues, environmental
restrictions, soil and water conditions, weather and other
hazards, site access matters and building permit issues; the
effects of environmental and structural building conditions
relating to our properties; the ability to timely and cost-effectively
integrate into Harrah's operations the companies that it acquires,
including with respect to its acquisition of Caesars; access
to available and feasible financing, including financing for
Harrah's acquisition of Caesars, on a timely basis; changes
in laws (including increased tax rates), regulations or accounting
standards, third-party relations and approvals, and decisions
of courts, regulators and governmental bodies; litigation outcomes
and judicial actions, including gaming legislative action,
referenda and taxation; the ability of our customer-tracking,
customer loyalty and yield-management programs to continue
to increase customer loyalty and same store sales; our ability
to recoup costs of capital investments through higher revenues;
acts of war or terrorist incidents; abnormal gaming holds;
and the effects of competition, including locations of competitors
and operating and market competition.
Any forward-looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak
only as of the date made. Harrah's and Caesars disclaim any
obligation to update the forward-looking statements. You are
cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date stated, or if no
date is stated, as of the date of this press release.
Additional Information about the Acquisition and Where
to Find It
In connection with Harrah's proposed acquisition of Caesars
("Acquisition"), Caesars and Harrah's intend to file relevant
materials with the Securities and Exchange Commission (SEC),
including a registration statement on Form S-4 that will contain
a prospectus and a joint proxy statement. INVESTORS AND SECURITY
HOLDERS OF HARRAH'S AND CAESARS ARE URGED TO READ THE WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT HARRAH'S, CAESARS AND THE ACQUISITION. The proxy statement,
prospectus and other relevant materials (when they become available),
and any other documents filed by Harrah's or Caesars with the
SEC, may be obtained free of charge at the SEC's web site at
www.sec.gov. In addition, investors and security holders may
obtain free copies of the documents filed with the SEC by Harrah's
by directing a written request to: Harrah's, One Harrah's Court,
Las Vegas, Nevada 89119, Attention:
Investor Relations or Caesars Entertainment, Inc., 3930 Howard
Hughes Parkway, Las Vegas, Nevada 89109, Attention: Investor
Relations. Investors and security holders are urged to read
the proxy statement, prospectus and the other relevant materials
when they become available before making any voting or investment
decision with respect to the Acquisition.
Harrah's, Caesars and their respective executive officers
and directors may be deemed to be participants in the solicitation
of proxies from the stockholders of Caesars and Harrah's in
connection with the Acquisition. Information about those executive
officers and directors of Harrah's and their ownership of Harrah's
common stock is set forth in the Harrah's Form 10-K for the
year ended December 31, 2003, which was filed with the SEC
on March 5, 2004, and the proxy statement for Harrah's 2004
Annual Meeting of Stockholders, which was filed with the SEC
on March 4, 2004. Information about the executive officers
and directors of Caesars and their ownership of Caesars common
stock is set forth in the proxy statement for Caesars' 2004
Annual Meeting of Stockholders, which was filed with the SEC
on April 16, 2004. Investors and security holders may obtain
additional information regarding the direct and indirect interests
of Harrah's, Caesars and their respective executive officers
and directors in the Acquisition by reading the proxy statement
and prospectus regarding the Acquisition when it becomes available.
This communication shall not constitute an offer to sell or
the solicitation of an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering
of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act
of 1933, as amended.
Contact:
Brad Belhouse - Investors
Harrah's Entertainment, Inc.
(702) 407-6367
Gary Thompson - Media
Harrah's Entertainment, Inc.
(702) 407-652
Josh Hirsberg - Investors
Caesars Entertainment, Inc.
(702) 699-5269
Robert Stewart - Media
Caesars Entertainment, Inc.
(702) 699-5043
http://investor.harrahs.com/releaseDetail.cfm?ReleaseID=139189
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