Casino operator Pinnacle Entertainment Inc will obtain Ameristar Casinos Inc for about $869 million to expand primarily within the U.S. Midwest and South, sending Pinnacle’s shares to their highest in a lot more than 3 years.

Pinnacle said it would spend $26.50 per share in cash, representing a premium of 20 % more than Ameristar Casinos’ closing value on Thursday.

Ameristar shares briefly traded above the offer price tag before easing back to $26.16 in morning trade on the Nasdaq on Friday.

Shares of Pinnacle, that will acquire eight casino-resorts inside the deal, rose as a great deal as 16.6 percent to $15.57 on the New York Stock Exchange.

Sterne, Agee & Leach analyst David Bain said another suitor could emerge.

“The amount that Pinnacle is paying is not overpriced by any means. There are others that may be interested in Ameristar…,” he said, suggesting Penn National Gaming Inc (PENN.O) and MGM Resorts International (MGM.N) as possible rival suitors.

The total deal value is $2.8 billion, including debt of $1.9 billion and money on hand of $116 million.

Pinnacle and Ameristar had combined revenue of $2.35 billion in 2011, just below Penn National with $2.74 billion. Las Vegas Sands Corp (LVS.N), the biggest U.S. casino operator, had revenue of $9.41 billion.

Pinnacle’s biggest acquisition to date was in 2006 when it acquired the Sands Casino in Atlantic City for $250 million.

Pinnacle stated earlier this year it would also buy Federated Sports + Gaming Inc and Retama Partners Ltd. Those smaller deals have not yet closed.

“The acquisition of Ameristar’s properties will complement Pinnacle’s existing portfolio by adding eight casino-resorts in some of the nation’s best gaming markets,” Pinnacle said.

Ameristar casinos are located in St. Louis, Missouri; Kansas City, Missouri; Council Bluffs, Iowa; Black Hawk, Colorado; Vicksburg, Mississippi; East Chicago, Indiana; and Jackpot, Nevada. Pinnacle owns and operates seven casinos, located in Louisiana, Missouri and Indiana, and a racetrack in Ohio.

Ameristar reported a 2 percent decline in revenue in the third quarter, missing Wall Street forecasts as it faced increased competition.

The company’s largest shareholder is hedge fund Addison Clark Management LLC, with a 9.6 % stake as of September 30.

The deal comes a little a lot more than a month after Pinnacle stated it could lose its investment of much more than $100 million in a casino project in Vietnam as a result of problems with gaming licenses and funding by local banks.

Goldman Sachs & Co advised Pinnacle, while Ameristar was advised by Lazard and Centerview Partners LLC.

Pinnacle shares were trading at $15.35 in late morning trading on the New York Stock Exchange.