Churchill-Arlington Agreement Reached

Churchill Downs Inc. and Duchossois Industries Inc., which owns Arlington International Racecourse, announced Friday an agreement in which the two entities will be merged.

Under the terms of the agreement, CDI will issue 3.15 million shares of its common stock upon closing to Duchossois Industries. The agreement also provides for the issuance of up to an additional 1.25 million shares of CDI stock to Duchossois Industries depending on certain developments and conditions over a future period related to the opening of the Rosemont riverboat casino. Based on the approximately 9.9 million shares of Churchill's outstanding stock, Duchossois Industries would become Churchill's largest shareholder, with a 31.8% interest.

Duchossois Industries owner Richard L. Duchossois will serve as a Churchill Downs director, as a member of the board's executive committee, and as chairman of Arlington's operating board. Duchossois Industries will be entitled initially to designate three members of the CDI board of directors, which will be expanded from 12 to 15 members. Scott Mordell will continue as Arlington's president and chief executive officer.

According to the announcement, Duchossois has agreed to restrictions on the voting and transfer of the shares of CDI common stock received in the merger. The agreement, which is subject to approval of the Illinois Racing Board, will be presented to CDI shareholders for approval at a special meeting later this year.

The agreement includes Arlington International Racecourse Inc., Arlington Management Services Inc. and Turf Club of Illinois Inc., which own and operate the Chicago-area racetrack and five off-track betting and pari-mutuel operations in Illinois.

"The horse racing industry is consolidating in response to a changing market and new distribution systems," said Thomas H. Meeker, CDI's president and chief executive officer. "Our merger with Arlington is the beginning of a strategic relationship that will enable us to combine resources with a world- class operation that is committed to quality live racing, positioning both companies for future growth in this changing industry.

Meeker said the acquisition of Arlington will boost the annual number of CDI racing programs by 18% and adds to the company's simulcast network a signal that is "well known throughout the United States and in major international markets."

Duchossois said: "We believe this merger will allow us to complement the Arlington brand of excellence with that of Churchill Downs, the best-known brand in horse racing. We believe CDI's business strategy and commitment to excellence are aligned with our own operating philosophy. We have a shared vision of dedication to customer service, commitment to the live racing experience and growth of simulcast sales. This business combination will enable us to coordinate quality racing schedules throughout the Midwest and will greatly benefit Illinois racing. I look forward to joining with a dynamic company like CDI and continuing my involvement with Arlington."