updated 10/10/2006 2:43:51 PM ET 2006-10-10T18:43:51

Two shareholders of Harrah’s Entertainment Inc. have sued the company, its board and its proposed buyers, alleging that a $15.1 billion takeover offer is an “apparent camouflaged management buyout.”

Private equity firms Texas Pacific Group and Apollo Management have offered to buy Las Vegas-based Harrah’s for $81 a share, a price called “inadequate” by shareholders Henoch Kaiman and Joseph Weiss.

The proposed class-action lawsuit filed last Thursday in Delaware Chancery Court says the offer was timed to take advantage of a recent slump in the share price of Harrah’s.

The filing also says Harrah’s Chief Executive Gary Loveman ”expects to be part of an eventual deal, but took careful steps not to make the negotiations appear like the typical management buyout.”

The suit seeks to stop the proposed buyout and conduct “a fair process” for selling shares of Harrah’s, the world’s largest casino operator.

Harrah’s said last Monday that its non-management directors were reviewing the $81-per-share bid. The stock was down 18 cents at $76.23 Tuesday on the New York Stock Exchange.

Officials at Harrah’s and Apollo Management could not be immediately reached for comment, while a spokesman for Texas Pacific declined to comment.

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