Bloomberg) -- Eldorado Resorts Inc. agreed to buy Caesars Entertainment Corp. for about $8.7 billion in cash and stock, according to a person familiar with the situation.
The deal values Caesars at about $13 a share, according to the person, who asked not to be identified because the information isn’t public. Including assumed Caesars debt, the transaction would be valued at about $18 billion. The combined entity will be split almost equally between shareholders of both companies, the person said, adding that the deal will be announced Monday.
The price represents a 30% premium to Caesars’s close on Friday. Eldorado had a market value of about $4 billion as of Friday.
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Caesars had been pushed by activist billionaire Carl Icahn, its biggest shareholder according to data compiled by Bloomberg, to consider a sale. Earlier discussions had focused on a deal that would have valued Caesars at $11 a share, a person familiar with those talks had said.
Eldorado shares have risen 17% in the past year, compared with a 12% decline in Caesars’ stock. The S&P Supercomposite Casinos & Gaming Index, which tracks the performance of nine stocks including the two companies, slumped about 20%.
Caesars shares are trading at 24 times reported earnings, while Eldorado is valued at 33 times, according to data compiled by Bloomberg.