Harrah's Entertainment Inc., the world's largest casino company, has agreed to a $16.7-billion offer from two private equity firms, two people with knowledge of the negotiations said.
The agreement with Apollo Management and Texas Pacific Group came late last week but lawyers for both sides have been working out the details, said the sources, who spoke on condition of anonymity because of the sensitivity of the talks.
An official announcement on the deal could come as early as today, the sources said Monday. A third person close to the matter, who also spoke on condition of anonymity, said a final agreement was very close.
Spokesmen for Harrah's, Apollo and Texas Pacific declined to comment.
The deal values Harrah's at $90 a share and represents a 36% premium over Harrah's share price Sept. 29, the last trading day before Apollo and Texas Pacific first proposed a buyout Oct. 2. The group also would assume $10.7 billion in debt.
Deliberations by a special committee of Harrah's board began after last week's Tuesday deadline for offers.
Penn National Gaming Inc., a Wyomissing, Pa.-based race track and casino operator, was eliminated from the bidding with its reported offer of $87 a share, mostly in cash. A Penn spokesman declined to comment.
The decision ends more than two months of silence after the original offer by Apollo and Texas Pacific for $81 a share.
Shares of Las Vegas-based Harrah's rose $2.68 to $82.18 on Monday.
Private money has gone on a months-long shopping spree for casino operators, which are valued for their cash-generating ability and significant real estate holdings.
The Harrah's deal is the biggest to take a public casino company private and ranks as the seventh-largest leveraged buyout in history, according to Thomson Financial.
The largest was RJR Nabisco Inc.'s $25-billion acquisition by Kohlberg Kravis Roberts & Co. in 1998.
The premium paid for Harrah's and the willingness of leaders in the private equity industry to go through the arduous process of becoming licensed casino operators, which could take more than a year, represents a breakthrough, said CIBC World Markets analyst David Katz.
"It certainly suggests an icebreaker like this could lead to more" casino company acquisitions, he said.
"This isn't the last deal in the space," said Stifel Nicolaus & Co. analyst Rod Petrik.
Harrah's is the world's largest casino company by revenue, operating 39 casinos nationwide, including Caesars Palace, Bally's and Paris on the Las Vegas Strip, and Caesars and Harrah's in Atlantic City, N.J.
The company also has interests in Casino Windsor in Canada, to be renamed Caesars Windsor in 2008, and Conrad Punta del Este in Uruguay.
By year's end, Harrah's is to acquire all the shares in London Clubs International, which operates seven casinos in Britain, two in Egypt, one in South Africa and is a consultant for a casino in Lebanon.
Harrah's also is pursuing projects in Singapore, the Bahamas, Spain and Slovenia.