UPDATE: Caesars Entertainment, Caesars Acquisition Co. Will Merge

Caesars Entertainment Corporation

("Caesars Entertainment") and Caesars Acquisition Company

("Caesars Acquisition") today announced that they have entered into a definitive agreement to merge in an all-stock transaction. The merged company will be one of the largest gaming and entertainment companies in the world. Upon completion of the merger and the proposed restructuring of Caesars Entertainment Operating Company, Inc. ("CEOC"), the merged company will be well capitalized and positioned for sustainable long-term growth and value creation. Upon the completion of the transaction, Caesars Entertainment will own a collection of high-growth assets, including properties in destination markets and a majority stake in Caesars Interactive Entertainment, Inc. ("CIE"), and will operate a valuable network of domestic and international resorts and casinos. The merged company will be the preeminent gaming and hospitality company in Las Vegas. It will operate Caesars Palace and own 11 properties there, including nine casino resorts and the LINQ promenade and High Roller observation wheel. The merged company will also own CIE, Harrah's New Orleans, Harrah's Atlantic City, Harrah's Laughlin and Caesars Acquisition's current equity interest in Horseshoe Baltimore. All of the company's properties will remain connected via the Total Rewards loyalty network. The planned merger of Caesars Entertainment and Caesars Acquisition will also support the proposed restructuring of CEOC, a subsidiary of Caesars Entertainment. CEOC announced on December 19, 2014, that it and Caesars Entertainment had reached an agreement with CEOC's first lien noteholder steering committee regarding the terms of a comprehensive financial restructuring plan that will substantially reduce debt and lower interest payments. The successful completion of the merger will position the merged company to support the restructuring of CEOC without the need for any significant outside financing. The strength of the merged company will position it to be a strong guarantor for the restructured CEOC's obligations, including lease payments its "OpCo" subsidiary will make to "PropCo." "The merger of Caesars Entertainment and Caesars Acquisition solidifies our focus on owning assets in destination and high-growth markets and businesses, while maintaining the benefits of operating our network and the Total Rewards loyalty program," said Gary Loveman, Chairman and Chief Executive Officer of Caesars Entertainment. "Upon completion of the merger and restructuring, Caesars Entertainment Corp. entities will be financially strong, with significantly reduced leverage and a much simpler and straightforward corporate structure." On a pro-forma basis, the merged company will have a combined market capitalization of $3.2 billion, based on closing prices on December 19, 2014. The merged company will have a combined cash balance of $1.7 billion (excluding cash at CEOC). As of September 30, 2014, Caesars Growth Partners, LLC ("Caesars Growth Partners") had approximately $1.0 billion of cash and net leverage of 3.2x. Pro forma for the merger and the proposed restructuring of CEOC, all Caesars-owned entities (including CEOC "OpCo") will be reasonably leveraged and produce positive free cash flow. The merged company will produce positive free cash flow on a consolidated basis. Pursuant to the terms of the merger agreement, and subject to the overall restructuring of CEOC, regulatory approval and other closing conditions, each outstanding share of Caesars Acquisition class A common stock will be exchanged for 0.664 share of Caesars Entertainment common stock, subject to adjustments set forth in the merger agreement, which would result in Caesars Entertainment stockholders owning approximately 62% of the combined company on a fully-diluted basis and Caesars Acquisition stockholders owning approximately 38%. No new debt will be issued in connection with the merger. The merged company will continue to be controlled by affiliates of Apollo Global Management and TPG Capital. Based on each of the company's records, approximately 90% of the stockholders of Caesars Entertainment also own shares of Caesars Acquisition, and vice versa, implying significant overlap in the stockholders of the two companies. Loveman will be Chairman and CEO of the combined company and has agreed to a new employment agreement that extends his tenure until the end of 2016. Loveman will oversee the restructuring of CEOC and continue to focus on recruiting senior talent to Caesars. Mitch Garber, CEO of Caesars Acquisition, will be CEO of CIE. Following the merger, Garber will join the Board of Directors of Caesars Entertainment as Vice Chairman and will assume an expanded leadership role on a project-specific basis across the Company. The merged company will conduct business as Caesars Entertainment and continue to trade on the NASDAQ under the ticker CZR. The merger agreement was negotiated and unanimously recommended by the Caesars Entertainment and Caesars Acquisition special committees, each comprised solely of independent members of their respective boards of directors. Centerview Partners served as the exclusive financial advisor to the special committee of Caesars Entertainment and Reed Smith LLP served as the committee's legal counsel. Moelis & Company LLC served as the exclusive financial advisor to the special committee of Caesars Acquisition and Skadden, Arps, Slate, Meagher & Flom LLP served as the committee's legal counsel.