Harrah’s Entertainment Inc., the world’s largest casino company, received a buyout offer of as much as $16.7 billion from Apollo Management LP and Texas Pacific Group, two people familiar with the proposal said.

The bid, valued at as much as $90 a share, makes Texas Pacific and Apollo the most likely buyers, the people, who declined to be identified because the offer wasn’t public, said. Harrah’s board considered the leveraged buyout proposal on Sunday, three people with knowledge of the meeting said.

Harrah’s, which bought Caesars Entertainment Inc. last year for $9.4 billion in the largest-ever casino acquisition, attracted buyers who want to use its cash to help repay the loans needed to finance a purchase. Harrah’s has generated $1.08 billion of cash from everyday operations through September 2006, nearly double the $591 million generated in all of 2005.

“There’s been a lot of head fakes, but this is where it’s been headed all along,” said Robert LaFleur, a Stamford, Conn.-based analyst at Susquehanna Financial Group, who has a “neutral” rating on the stock. “Given where the stock was where this whole process got started, I’d be hard pressed to see stock getting to $90 on its own.”

The buyout group’s proposal comes more than two months after the firms first offered $15.1 billion for the Las Vegas-based owner of Flamingo and Caesars Palace casinos.

Shares of Harrah’s rose $2.68, or 3.4%, to $82.18 at 4:01 p.m. in composite trading on the New York Stock Exchange and have climbed 24% since the initial offer.

A Harrah’s spokesman, Alberto Lopez, said he couldn’t comment on “market speculation.” A Texas Pacific spokesman, Owen Blicksilver, and an Apollo spokesman, Steve Anreder, also declined to comment. The Wall Street Journal reported the offer earlier on Sunday.

The Associated Press yesterday reported that Harrah’s agreed to the $16.7 billion deal late last week. The deal may be announced as soon as today once lawyers work out the details, the news agency said.

Harrah’s said October 2 that the firms initially offered $15.1 billion, or $81 a share, a bid later raised to $15.5 billion, or $83.50 a share, on October 11.

A casino company with one-fifth Harrah’s market value, Penn National Gaming Inc., bid $87 a share in cash and stock, the Wall Street Journal reported last week. Shares of Penn National climbed $3.08, or 8.1%, to $41.24 in Nasdaq Stock Market composite trading.

At $90 a share, Texas Pacific and Apollo would be paying less for Harrah’s earnings than what Las Vegas Sands’ or MGM’s profits are worth on the stock market. Harrah’s is being valued at 21.4 times projected 2007 earnings, based on the average estimate of 18 analysts surveyed by Bloomberg. That compares with a 24.6 ratio for MGM Mirage and 50.7 for Las Vegas Sands Corp. at last week’s stock market prices, according to Bloomberg data.

The perceived risk of owning Harrah’s bonds increased, according to traders who bet on the creditworthiness of companies in the credit-default swap market.

Credit-default swaps based on $10 million of Harrah’s bonds rose 4.7% to $226,350 from $216,250 on December 15, according to data compiled by Credit Market Analysis in London. An increase in price indicates deterioration in the perception of credit quality.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. They were conceived to protect bondholders against default, and pay the buyer face value in exchange for the underlying securities should the company fail to adhere to its debt agreements.

Harrah’s 5.75% bond due in October 2017 fell 3 cents to 83 cents on the dollar at 3:08 p.m., according to Trace, the bond-price reporting system of the NASD. The yield rose to 8.15% from 7.68% on December 15.

Las Vegas Strip gambling revenue gained 15% to $6.4 billion in the year through June, the Nevada Gaming Control Board has said.

The value of the global casino market, based on the amount won by companies, may reach $67.4 billion this year and will rise to about $89.3 billion by 2012, according to West Bromwich, England-based Global Betting and Gaming Consultants.

Harrah’s owns or is in the process of opening more than 40 properties in 13 American states, the Bahamas, Spain, and Slovenia. Penn National owns and operates 16 casinos and horse-racing facilities in 12 states and Canada.