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.

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.
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.