PARK PLACE
ENTERTAINMENT
Contacts: Geoffrey Davis
Park Place Entertainment
212-872-4603
Jim Gallagher (Media)
Starwood Hotels
914-640-8194
Dan Gibson (Investors)
Starwood Hotels
914-640-8175
PARK PLACE ENTERTAINMENT ANNOUNCES ACQUISITION OF
CAESARS WORLD INC. FROM STARWOOD HOTELS
NEW YORK APRIL 27,1999 - Park Place Entertainment Corporation (NYSE: PPE)
announced today that it has entered into a definitive agreement to acquire
Caesars World Inc. and other gaming assets from Starwood Hotels & Resorts
Worldwide, Inc. (NYSE: HOT) for total consideration of $3.0 billion.
The all-cash transaction has been approved by the Boards of Directors of both
companies and is expected to close in the fourth quarter of 1999. Completion
is subject to the satisfaction of various conditions contained in the
purchase agreement, including obtaining certain regulatory approvals.
Starwood's gaming assets include the Caesars Palace in Las Vegas; Caesars
Atlantic City; Caesars Tahoe; Glory of Rome riverboat in Harrison County,
Indiana; the Sheraton Casino & Hotel in Tunica, Mississippi; management of
the slot operations at Dover Downs Racetrack in Dover, Delaware; and various
other joint venture, real estate and management contract interests or
licenses for gaming properties in Halifax and Sydney, Nova Scotia; Windsor,
Ontario; Manila, Philippines; and Gauteng Province of South Africa. This sale
excludes the Desert Inn in Las Vegas.
"This is an important transaction in that it provides significant benefits
for both companies," said Arthur Goldberg, president and chief executive of
Park Place. "It meets all the conditions we established for making an
acquisition - it provides
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strategic assets; it should be accretive to earnings in the first year; and
it has potential for future growth opportunities."
"The acquisition of Caesars is strategic in that we obtain an internationally
recognized brand name and a portfolio of premier gaming assets. These assets
enhance our geographic diversification by providing an immediate leadership
position in Indiana, the fifth largest gaming market in the United States,
and by broadening our international presence with additional interests in
Canada, the Philippines and South Africa," continued Mr. Goldberg.
"By acquiring the Caesars' brand name and related customer database, we plan
to heavily cross market between our destination resorts. This will boost
revenues and expand the markets where we operate."
"Furthermore, we expect this transaction to be accretive to earnings in the
first year and, given our track record in integrating casino operations, we
should achieve significant synergies leading to additional profits. We also
pick-up strategically located, undeveloped land parcels in Atlantic City and
Las Vegas that can be used for future development," said Mr. Goldberg.
Barry S. Sternlicht, chairman and chief executive of Starwood said, "Over the
past several months, it became increasingly clear that it would be best for
our company to focus on our core global hotel business. The volatility of the
high end of the gaming business and the requirements of the business for
major ongoing capital investment were key to our decision to sell Caesars,
which remains the most recognized name in the gaming industry. We are very
pleased that we could come to an agreement with a world class owner/operator
like Park Place Entertainment headed by Arthur Goldberg at a price that makes
the transaction EPS accretive for Starwood."
"We will use the proceeds of the transaction to pay down debt, strengthen our
balance sheet and significantly reduce our cost of financing. As a result, we
continue to make progress towards our goal of achieving an investment grade
rating," Mr. Sternlicht said.
"With the sale of our gaming business, we will have sold approximately $6
billion of assets since February of 1998. This represents a significant
portion of the total price we paid for ITT and we continue to own ITT's crown
jewels - the Sheraton, St. Regis/Luxury Collection, CIGA and Four Points by
Sheraton hotel brands - nearly 500 hotel properties with more than 140,000
rooms," Mr. Sternlicht said.
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Starwood, through its subsidiaries, owns and leases 172 hotels and operates
the St. Regis/Luxury Collection, Westin, Sheraton, Four Points and W brands,
and is one of the leading hotel companies in the world, with more than 700
hotels in 72 countries and approximately 130,000 employees.
Park Place was created on December 31, 1998 through the tax-free distribution
of Hilton Hotels Corporation's gaming division to its shareholders and the
subsequent merger with Grand Casinos, Inc. Park Place is the only casino
gaming company with a leading presence in Nevada, New Jersey, and Mississippi
- - the three largest gaming markets in the United States.
Upon completion of the transaction, Park Place will have interests in 29
gaming properties located throughout the United States and around the world
with nearly 2 million square feet of gaming space and approximately 28,000
hotel rooms.
NOTE: THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF FEDERAL SECURITIES LAW, INCLUDING STATEMENTS CONCERNING BUSINESS
STRATEGIES AND THEIR INTENDED RESULTS, AND SIMILAR STATEMENTS CONCERNING
ANTICIPATED FUTURE EVENTS AND EXPECTATIONS THAT ARE NOT HISTORICAL FACTS. THE
FORWARD-LOOKING STATEMENTS IN THIS PRESS RELEASE ARE SUBJECT TO NUMEROUS
RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED BY THE STATEMENTS HEREIN.
ADDITIONAL INFORMATION CONCERNING POTENTIAL FACTORS THAT COULD AFFECT FUTURE
FINANCIAL RESULTS IS INCLUDED IN THE BOTH COMPANY'S ANNUAL REPORTS ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1998.
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