UPDATE: Caesars Entertainment, Caesars Acquisition Co. Will Merge

Caesars Entertainment Corporation(NASDAQ: CZR) ("Caesars Entertainment") and Caesars Acquisition Company(NASDAQ: CACQ) ("Caesars Acquisition") today announced that they have enteredinto a definitive agreement to merge in an all-stock transaction. The mergedcompany will be one of the largest gaming and entertainment companies in theworld. Upon completion of the merger and the proposed restructuring of CaesarsEntertainment Operating Company, Inc. ("CEOC"), the merged company will bewell capitalized and positioned for sustainable long-term growth and valuecreation. Upon the completion of the transaction, Caesars Entertainment willown a collection of high-growth assets, including properties in destinationmarkets and a majority stake in Caesars Interactive Entertainment, Inc.("CIE"), and will operate a valuable network of domestic and internationalresorts and casinos.The merged company will be the preeminent gaming and hospitality company inLas Vegas. It will operate Caesars Palace and own 11 properties there,including nine casino resorts and the LINQ promenade and High Rollerobservation wheel. The merged company will also own CIE, Harrah's New Orleans,Harrah's Atlantic City, Harrah's Laughlin and Caesars Acquisition's currentequity interest in Horseshoe Baltimore. All of the company's properties willremain connected via the Total Rewards loyalty network.The planned merger of Caesars Entertainment and Caesars Acquisition will alsosupport the proposed restructuring of CEOC, a subsidiary of CaesarsEntertainment. CEOC announced on December 19, 2014, that it and CaesarsEntertainment had reached an agreement with CEOC's first lien noteholdersteering committee regarding the terms of a comprehensive financialrestructuring plan that will substantially reduce debt and lower interestpayments. The successful completion of the merger will position the mergedcompany to support the restructuring of CEOC without the need for anysignificant outside financing. The strength of the merged company willposition 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 ourfocus on owning assets in destination and high-growth markets and businesses,while maintaining the benefits of operating our network and the Total Rewardsloyalty program," said Gary Loveman, Chairman and Chief Executive Officer ofCaesars Entertainment. "Upon completion of the merger and restructuring,Caesars Entertainment Corp. entities will be financially strong, withsignificantly reduced leverage and a much simpler and straightforwardcorporate structure."On a pro-forma basis, the merged company will have a combined marketcapitalization 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 netleverage of 3.2x. Pro forma for the merger and the proposed restructuring ofCEOC, all Caesars-owned entities (including CEOC "OpCo") will be reasonablyleveraged and produce positive free cash flow. The merged company will producepositive free cash flow on a consolidated basis.Pursuant to the terms of the merger agreement, and subject to the overallrestructuring of CEOC, regulatory approval and other closing conditions, eachoutstanding share of Caesars Acquisition class A common stock will beexchanged for 0.664 share of Caesars Entertainment common stock, subject toadjustments set forth in the merger agreement, which would result in CaesarsEntertainment stockholders owning approximately 62% of the combined company ona fully-diluted basis and Caesars Acquisition stockholders owningapproximately 38%. No new debt will be issued in connection with the merger.The merged company will continue to be controlled by affiliates of ApolloGlobal Management and TPG Capital. Based on each of the company's records,approximately 90% of the stockholders of Caesars Entertainment also own sharesof Caesars Acquisition, and vice versa, implying significant overlap in thestockholders of the two companies.Loveman will be Chairman and CEO of the combined company and has agreed to anew employment agreement that extends his tenure until the end of 2016.Loveman will oversee the restructuring of CEOC and continue to focus onrecruiting senior talent to Caesars. Mitch Garber, CEO of Caesars Acquisition,will be CEO of CIE. Following the merger, Garber will join the Board ofDirectors of Caesars Entertainment as Vice Chairman and will assume anexpanded leadership role on a project-specific basis across the Company.The merged company will conduct business as Caesars Entertainment and continueto trade on the NASDAQ under the ticker CZR.The merger agreement was negotiated and unanimously recommended by the CaesarsEntertainment and Caesars Acquisition special committees, each comprisedsolely of independent members of their respective boards of directors.Centerview Partners served as the exclusive financial advisor to the specialcommittee of Caesars Entertainment and Reed Smith LLP served as thecommittee's legal counsel. Moelis & Company LLC served as the exclusivefinancial advisor to the special committee of Caesars Acquisition and Skadden,Arps, Slate, Meagher & Flom LLP served as the committee's legal counsel.