Harrah's Entertainment confirmed it has agreed to be acquired for $90 a share in cash, or $17.1 billion, by two private equity firms.
The purchase, which was reported earlier by CNBC, is by Apollo Management and Texas Pacific Group andincludes the assumption of $10.7 billion in Harrah's debt.
Harrah's, the world's largest casino company, was also courted by smaller rival Penn National Gaming, which did not match the financial firepower of the private equity companies in its offer.
As part of the deal, investors will still collect the Harrah's quarterly dividend of $0.40 per share until the deal closes. Sources said it could be a year before the transaction is completed. Apollo will start paying interest after 14 months if the deal is not closed.
Harrah's management will continue to run the company as part of the deal with private equity buyers.
Harrah's board considered a third option of a recapitalization plan if neither of the bids were accepted. The recapitalization likely would have included a special dividend for shareholders.
The casino sector has been rife with deals this year as executives move to run their businesses away from the pressure of public markets amid strong demand from private equity firms that are branching out to new areas with hundreds of billions of dollars to spend.
The deal is one of the top ten largest private equity buyouts this year. Others include the $21 billion buyout of HCA and the $20 billion buyout of Equity Office Properties Trust.
The deal ends a takeover saga set in motion more than two months ago, when Las Vegas-based Harrah's said Apollo and TPG had offered to buy it. Smaller casino operator Penn National then began considering a bid.
That gap between the price offered and the level of Harrah's shares widened at various points during the past two months as investor confidence that a deal would be reached vacillated -- partly due to concerns the casino licensing requirements could mean a gap of at least a year before the deal can be completed, experts have said.