Updated from 11:09 a.m. EDT

Harrah's Entertainment

( HET) said Monday that its board has received an offer from Apollo Management and Texas Pacific Group to acquire the casino operator for $81 a share.

Shares of Harrah's, which have traded between $57.29 and $83.33 in the past year, surged 14% to $75.53 Monday.

At roughly $76, and including $10.66 billion in long-term debt, the company has an enterprise value of about $22.5 billion. An $81-a-share deal, including debt, would value Harrah's at roughly $25.25 billion.

Such a deal would rank with the biggest leveraged buyouts of all time. The largest LBO in history, when debt is included, came earlier this year, when hospital operator


(HCA) - Get Report

agreed to a buyout valued at $33 billion.

Harrah said its directors have established a special committee, consisting of nonmanagement board members, to review the proposal. The committee has hired UBS Securities as its financial adviser and Kaye Scholer as its legal counsel.

Harrah's said the committee hasn't determined that a buyout is in the best interests of the company or its stockholders. Harrah's said there was no assurance that it will agree to the bid or to any other transaction.

A buyout would be a big boost to investors, who have seen the stock languish in recent months despite the fact that some consider Harrah's to be a value play. The company owns some very valuable casinos, such as Caesars Palace in Las Vegas and Bally's in Atlantic City, but its earnings growth potential may lag some of its peers in coming years.

In a research note last week, when the stock traded $67.51, JP Morgan analyst Harry Curtis said Harrah's valuation was not expensive, nor was it "compellingly cheap." At that price, the stock traded at 7.8 times debt-adjusted EBITDA in 2007 and at 16.2 times EPS next year.

"If HET's expected three year EPS growth rate were north of 15%, then we'd argue for a premium multiple," Curtis wrote.

"But at an estimated

compounded annual growth rate of 11% through 2008, with the prospect for a multi-billion, multi-year investment plan, and little likelihood for a major recapitalization, we expect no multiple expansion and modest upside in the stock over the next 12 months."

Curtis and other analysts have raised concerns about Harrah's being forced to increase its promotional spending in Atlantic City to fight off competition from the renovated Borgata casino, which is owned by

MGM Mirage

(MGM) - Get Report


Boyd Gaming

(BYD) - Get Report


But the company's Las Vegas properties continue to perform very well.

As of late September, Harrah's third-quarter net revenue was tracking ahead of analysts' average estimates, according to tracking data from Majestic Research.

Strong trends at Caesars Palace and the Flamingo, both on the Las Vegas Strip, are boosting results. As well, Harrah's continues to improve the efficiency of the former Caesar's properties, following the integration of its Total Rewards program implemented at those sites earlier this year, says Majestic analyst Matthew Jacob.

The buyout report sent shares of other casino operators jumping Monday. Boyd Gaming was up 5.5% to $40.55, MGM added 3% to $40.69,

Wynn Resorts

(WYNN) - Get Report

advanced 1.4% to $68.97, and

Ameristar Casinos


rose 2% to $22.16.

Separately Monday, Harrah's said it entered into a real state swap in Las Vegas with Boyd Gaming. Harrah's is giving up real estate that it owns near the Stardust Casino, which Boyd is razing to make way for its Echelon Place development.

In return, Harrah's receives Boyd's Barbary Coast property, located next door to Harrah's Flamingo casino.