Item 1.01 Entry into Material Definitive Agreement.
On February 20, 2017, Caesars Entertainment Corporation (
CEC
) and Caesars Acquisition Company (
CAC
)
entered into the First Amendment to Amended and Restated Agreement and Plan of Merger (the
Amendment
), which amends the Amended and Restated Agreement and Plan of Merger, dated as of July 9, 2016, between CEC and CAC (as
amended by the Amendment, the
Amended Merger Agreement
), pursuant to which CAC will merge with and into CEC, with CEC as the surviving entity (the
Merger
).
The Amendment provides for, among other things, a fixed exchange ratio such that upon consummation of the Merger, each share of CACs
class A common stock, par value $0.001 per share, and CACs class B common stock, par value $0.001 per share (collectively, the
CAC Common Stock
), issued and outstanding immediately prior to the effective time of the Merger
will be converted into, and become exchangeable for, that number of shares of CEC common stock, par value $0.01 per share (
CEC Common Stock
), equal to 1.625 (the
Exchange Ratio
). The Exchange Ratio was
calculated using the treasury stock method based on the daily volume-weighted average price of the CEC Common Stock and CAC Common Stock for the 20 consecutive trading days ended February 14, 2017 after taking into account the amount of CEC
Common Stock to be issued pursuant to the Third Amended Joint Plan of Reorganization of Caesars Entertainment Operating Company, Inc. (
CEOC
), a majority owned subsidiary of CEC, and its debtor subsidiaries that was confirmed by
the entry of an order by the United States Bankruptcy Court for the Northern District of Illinois on January 17, 2017 (the
Plan
), but without giving effect to the conversion of the convertible notes to be issued by CEC or the
buy-back of CEC Common Stock from certain creditors of CEOC, each as contemplated by the Plan.
CECs and CACs obligation to
consummate the Merger remains subject to (i) the receipt of (x) applicable regulatory approvals, including, if required, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and (y) certain tax opinions regarding the tax treatment of certain transactions contemplated by the Plan, (ii) the substantially contemporaneous consummation of the Plan and (iii) other customary closing conditions.
The Amendment was fully negotiated by and between the special committee of CECs Board of Directors (the
CEC Special
Committee
) and the special committee of CACs Board of Directors (the
CAC Special Committee
), was recommended by each of the CEC Special Committee and the CAC Special Committee and was approved by the CEC Board of
Directors and the CAC Board of Directors. The CEC Special Committee received an opinion as to the fairness, from a financial point of view, of the Exchange Ratio and the CAC Special Committee received an opinion as to the fairness, from a financial
point of view, of the Exchange Ratio to the unaffiliated stockholders of CAC. Stockholders of each of CEC and CAC will be asked to vote on the adoption of the Amended Merger Agreement at special meetings of CECs stockholders and CACs
stockholders, respectively, that will each be held on a date to be announced.
The foregoing description of the modifications to the
Amended Merger Agreement pursuant to the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 2.1 hereto, and is incorporated into this report by reference.