updated 4/3/2006 10:46:11 AM ET 2006-04-03T14:46:11

Ameristar Casinos Inc. on Monday said it offered about $1.5 billion in cash to acquire Aztar Corp., a Phoenix-based casino operator, trumping previous offers from Pinnacle Entertainment Inc. and Colony Capital LLC.

The Las Vegas-based casino company said it had offered $42 a share. That is $1 a share higher than the current top offer for Aztar.

In a sign investors expect the bidding will continue higher, Aztar shares rose $2.96, or 7.1 percent, to $44.95 in morning trading on the New York Stock Exchange. Ameristar Casinos shares were up a penny at $25.80 on the Nasdaq Stock Market.

Officials at Aztar were not immediately available for comment.

Aztar agreed in March to be bought out by Pinnacle for $38 per share in cash, and reportedly received a $41-per-share offer from real estate investment fund Colony Capital later that month.

Ameristar said the deal is "clearly superior to Pinnacle's and Colony's," and the combined operations would form the fifth largest public owner and operator of gambling properties in the United States. The combined businesses would generate about $2 billion in annual revenue, with roughly 21,000 slot machines, 650 table games and 7,000 hotel rooms.

Ameristar said its markets do not overlap with that of Aztar, which owns the Tropicana hotel-casinos in Las Vegas and Atlantic City, N.J., as well as casinos in Missouri and Indiana.

"Ameristar is prepared to enter into a merger agreement that, apart from providing superior value to Aztar's shareholders, would be substantially identical to Aztar's merger agreement with Pinnacle," it said in a statement.

The company said its proposal would not be subject to financing conditions, and it would expect to complete the deal by year-end, comparable to Pinnacle's timetable.

Ameristar said it expects the transaction, if approved, would "immediately and substantially" boost its earnings per share. Analysts expect the company to earn $1.33 per share for 2006, according to a poll by Thomson Financial.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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