By Nathan Gomes

(Reuters) -Private equity firm Apollo Funds will take International Game Technology's gaming and digital business and Everi Holdings private in an all-cash deal that values the combined business at $6.3 billion, the companies said on Friday.

Shares of IGT jumped 20%, while casino platform provider Everi rose 40% in early trading.

The deal is the latest sign of a resurgence in the private equity space following a period of dormancy due to high interest rates that had hindered debt financing for leveraged buyouts.

IGT had said in February it would split its lottery unit from its gaming businesses, which would be merged with Everi to form a separate entity valued at $6.2 billion, including debt.

Apollo Funds, a part of Apollo Global Management, would pay $4.05 billion in cash to IGT and said the value of combined companies would be better positioned under private ownership.

Everi shareholders would receive $1.2 billion, according to Reuters' calculation.

"We felt that the prior transaction meaningfully undervalued the Everi assets," said Craig Hallum analyst Sutton George.

IGT expects to use a significant part of the cash proceeds to repay debt and return to shareholders.

The deal, subject to approvals from regulators and Everi stockholders, is expected to be completed by the end of the third quarter of 2025. IGT shareholders approval is not required for the transaction.

After the closing, IGT Gaming and Everi would be privately owned companies that are part of one combined enterprise.

The newly formed combined company would be headquartered in Las Vegas.

IGT's top boss Vince Sadusky would oversee the separation of the gaming and lottery units and support the transition through the latest deal completion.

Post-closing, Sadusky would continue in his role, leading the lottery-focused company under its new name and stock ticker symbol, IGT said.

(Reporting by Nathan Gomes and Ananta Agarwal in Bengaluru; Editing by Shilpi Majumdar)