Eldorado Resorts Inc agreed to buy Caesars Entertainment Corp. for about $8.7 billion (Dh31.95 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’s 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 Friday closing price of $9.99. The stock was up about 16% in pre-market trading to $11.63 a share, as of 5.28am in New York. Eldorado had a market value of about $4 billion as of Friday.

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 per cent decline in Caesars’s 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.

Officials from Eldorado and Caesars declined to comment on the report. Reuters earlier reported the acquisition plan.

Eldorado wasn’t Caesars’s only suitor. Golden Nugget owner Tilman Fertitta proposed merging his restaurant and casino empire with Caesars last year, but was rejected by Caesars.

Caesars, whose properties include the flagship Caesars Palace and the Harrah’s chain, is still coping with the fallout of a 2008 leveraged buyout led by Apollo Global Management LLC and TPG that left it with a mountain of debt. The company completed a bankruptcy of its largest unit two years ago that brought in new board members and shareholders, including distressed-debt investors. Apollo and TPG have sold their shares.

Eldorado, which dates back to a single casino opened in Reno, Nevada, in 1973, has grown exponentially in recent years under the direction of Tom Reeg, who is now chief executive officer. The company in recent years acquired MTR Gaming Group Inc. and Isle of Capri Casinos, and last year added Tropicana Entertainment Inc., which was controlled by Icahn.

The business, which still counts the founding Carano family as its largest shareholder, now has 26 casinos in 12 states.