Stockholders to Receive $90.00 per Share in Cash; Transaction Valued at
Approximately $27.8 Billion
LAS VEGAS, Dec. 20 /PRNewswire-FirstCall/ -- Harrah's Entertainment,
Inc. (NYSE: HET) today announced it has entered into a definitive agreement
for affiliates of Texas Pacific Group (TPG) and Apollo Management, L.P. to
acquire Harrah's in an all-cash transaction valued at approximately $27.8
billion, including the assumption of approximately $10.7 billion of debt.
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Under the terms of the agreement, Harrah's stockholders will receive
$90.00 in cash for each outstanding Harrah's share. This represents a
premium of approximately 36% over Harrah's closing share price on September
29, 2006, the last trading day before disclosure of the initial offer made
by Apollo and TPG to acquire Harrah's for $81.00 per share.
The Harrah's Board of Directors, based on the recommendation of a
Special Committee of non-management directors which conducted a thorough
review of Harrah's strategic alternatives, has approved the agreement and
has recommended that Harrah's stockholders vote in favor of the agreement.
"In Apollo and TPG, we will have owners who share our vision for
Harrah's, are fully supportive of our current strategy and are committed to
helping us execute on it. This will be a change in ownership, not a change
in direction," said Gary Loveman, Harrah's chairman, chief executive
officer and president. "Harrah's management team and its 85,000 talented
employees look forward to working with Apollo and TPG as the Company moves
into the next phase of its growth and development."
"After careful consideration of the full range of strategic
alternatives, the Special Committee and the full Board concluded this
transaction is in the best interest of Harrah's stockholders," said Robert
Miller, co-chairman of the Special Committee. "Apollo and TPG are both
leading private equity firms with proven track records and strong
reputations."
David Bonderman, TPG founding partner, said, "We are delighted to be
joining with the excellent management team at Harrah's and our private
equity partners to continue to build on the Company's strong foundation.
Taking a long-term perspective, we believe we will be able to help Harrah's
deliver on its growth strategy."
Leon Black, founding partner of Apollo, said, "Harrah's has an
excellent brand name, strong cash flows, an impressive portfolio of
properties, a very talented management team, and highly skilled employees.
Together with our private equity partners, we look forward to building on
Harrah's successful track record of operational success and helping the
Company to achieve its strategic goals."
Under the merger agreement, Harrah's may solicit superior proposals
from third parties during the next 25 days. The board of directors of
Harrah's, through its special committee and with assistance of its
independent advisors, intends to solicit superior proposals during this
period. There can be no assurances that the solicitation of superior
proposals will result in an alternative transaction. Harrah's does not
intend to disclose developments with respect to this solicitation process
unless and until its board of directors has made a decision.
The transaction is expected to be completed in approximately one year,
and is subject to stockholder approval, regulatory approvals, and customary
closing conditions. It is not subject to a financing condition.
Harrah's intends to pay stockholders its regular quarterly dividend of
$0.40 per share until the transaction closes. Apollo and TPG have agreed to
increase the purchase price at a rate of $0.01973 per day per Harrah's
common share beginning March 1, 2008, if closing has not occurred by that
date, less an adjustment for any dividends paid on or after March 1, 2008.
Latham & Watkins LLP is serving as legal advisor to Harrah's and Kaye
Scholer LLP provided legal advice to the Special Committee. UBS Securities
LLC served as financial advisor to the Special Committee and rendered a
fairness opinion to the Board of Directors of Harrah's in connection with
the proposed transaction. In addition, Peter J. Solomon Company also
provided a fairness opinion to the Board of Directors. Deutsche Bank
Securities is serving as lead financial advisor to Apollo and TPG. Wachtell
Lipton Rosen & Katz, Cleary Gottlieb Steen & Hamilton LLP, and Schreck
Brignone are serving as the investors' legal advisors. Banc of America
Securities LLC, Citigroup Corporate and Investment Banking, Credit Suisse
Securities (USA) LLC, JPMorgan, and Merrill Lynch & Co. are also serving as
financial advisors to the investors. Global Leisure Partners LLP is acting
as financial advisor to Apollo.
About Harrah's
Harrah's Entertainment, Inc. is the world's largest provider of branded
casino entertainment through operating subsidiaries. Since its beginning in
Reno, Nevada nearly 70 years ago, Harrah's has grown through development of
new properties, expansions and acquisitions, and now owns or manages
casinos on four continents. The company's properties operate primarily
under the Harrah's, Caesars and Horseshoe brand names; Harrah's also owns
the London Clubs International family of casinos. Harrah's Entertainment is
focused on building loyalty and value with its 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 its Web site --
http://www.harrahs.com.
About Apollo
Apollo, founded in 1990, is a recognized leader in private equity, debt
and capital markets investing. Since its inception, Apollo has successfully
invested over $16 billion in companies representing a wide variety of
industries, both in the United States and internationally. Apollo is
currently investing its sixth private equity fund, Apollo Investment Fund
VI, L.P., which, along with related co-investment entities, represents
approximately $12 billion of new capital.
About TPG
TPG is a private investment partnership that was founded in 1992 and
currently has more than $30 billion of assets under management. With
offices in San Francisco, London, Hong Kong, Fort Worth and other locations
globally, TPG has extensive experience with global public and private
investments executed through leveraged buyouts, recapitalizations,
spinouts, joint ventures and restructurings. Visit http://www.tpg.com.
About the Transaction
In connection with the proposed merger, Harrah's will file a proxy
statement with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE STRONGLY ADVISED TO READ THE PROXY STATEMENT WHEN IT
BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders may obtain a free copy of the proxy statement (when
available) and other documents filed by Harrah's Entertainment, Inc. at the
Securities and Exchange Commission's Web site at http://www.sec.gov. The
proxy statement and such other documents may also be obtained for free by
directing such request to Harrah's Entertainment, Inc. Investor Relations,
2100 Caesars Palace Drive, Palace Tower, Spa Level, Las Vegas, NV 89109,
telephone: (702) 407-6381 or on the company's website at
http://investor.harrahs.com.
Harrah's and its directors, executive officers and certain other
members of its management and employees may be deemed to be participants in
the solicitation of proxies from its stockholders in connection with the
proposed merger. Information regarding the interests Harrah's participants
in the solicitation will be included in the proxy statement relating to the
proposed merger when it becomes available.
Forward-looking Statements
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, new projects, strategies, future
performance, the outcomes of contingencies and future financial results of
Harrah's. 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 of 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): the occurrence of any event,
change or other circumstances that could give rise to the termination of
the merger agreement with TPG and Apollo; the outcome of any legal
proceedings that have been, or will be, instituted against the Company
related to the merger agreement; the inability to complete the merger due
to the failure to obtain stockholder approval for the merger or the failure
to satisfy other conditions to completion of the merger, including the
receipt of all regulatory approvals related to the merger; the failure to
obtain the necessary financing arrangements set forth in the debt and
equity commitment letters delivered pursuant to the merger agreement; risks
that the proposal transaction disrupts current plans and operations and the
potential difficulties in employee retention as a result of the merger; the
impact of the substantial indebtedness to be incurred to finance the
consummation of the merger; the effects of local and national economic,
credit and capital market conditions on the economy in general, and on the
gaming and hotel industries in particular; construction factors, including
delays, increased costs for labor and materials, availability of labor and
materials, 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; access to available and reasonable
financing on a timely basis; the ability to timely and cost-effectively
integrate acquisition into our operations, including Caesars and London
Clubs; 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 or hotel sales; our ability to recoup costs of capital
investments through higher revenues; acts of war or terrorist incidents or
natural disasters; 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 disclaims 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.
SOURCE Harrah's Entertainment, Inc.
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Related links:
http://www.harrahs.com
http://www.tpg.com http://investor.harrahs.com
CONTACT:
Dan Foley, Investors, +1-702-407-6370, or
Alberto Lopez, Media, +1-702-407-6344, both of Harrah's
Entertainment, Inc.
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