Caesars is providing some limited confidential financial information to Eldorado, which is carrying out due diligence on the potential combination of the two casino companies, the sources told Reuters.
Eldorado has yet to make a binding offer for Caesars, and there is no certainty any bid will materialize or that a deal will be successfully negotiated, the sources told Reuters.
Earlier this month, Caesars struck a deal with billionaire investor Carl Icahn that will allow the activist investor and significant shareholder to add three directors to the board. Icahn also will have input on the selection of the company's next CEO.
Icahn has said he wants Caesars to either sell itself or give the company access to resources that would allow it to grow.
"I believe the best path forward for Caesars requires a thorough strategic process to sell or merge the company to further develop its already strong regional presence, which will allow Caesars to continue to take advantage of the Caesars Rewards program bringing more and more players into Caesars' Vegas market," Icahn said on March 1.
Shares of Caesars rose 2.8% on Monday to $8.31. Eldorado declined 2% to $45.58.
Want to learn about retirement planning from some of the nation's top experts? Join TheStreet's Robert "Mr. Retirement" Powell live in New York on April 6 for our Retirement Strategies Symposium. For a limited time, tickets are available for $99 for this full-day event. Check out the agenda, learn about the speakers and sign up here.