LAS VEGAS - 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.
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 - 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 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.
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