(Adds source, rationale on proposal)
By Mike Stone
April 14 (Reuters) - Gaming and Leisure Properties Inc , which buys real estate leased to casino operators, has raised its bid for Pinnacle Entertainment Inc's real estate, a person familiar with the deal said Tuesday.
Gaming and Leisure Properties made an offer last Friday, valuing Pinnacle at over $40 per share, which translates to about $2.4 billion, the person said.
Pinnacle Entertainment's shares rose 2.6 percent to $35 in aftermarket trading.
GLPI has given Pinnacle until end of day Thursday to respond, the person said.
The person was not authorized to speak on the record.
Pinnacle Entertainment and GLPI were not immediately available for comment.
GLPI went hostile with its previous offer of $36 per share to buy Pinnacle's real estate assets, citing the casino operator's "failure to engage" in talks.
Gaming and Leisure Properties' increased all stock offer is an effort to appeal to Pinnacle's shareholders, yet falls short of an open tender offer, the person said.
A deal would speed up and remove risks from Pinnacle's plan to split its real estate and operating assets into two companies by 2016, GLPI had said.
Pinnacle Entertainment had a market capitalization of $2.05 billion as of Tuesday's close.
The Wall Street Journal reported the increased offer on Tuesday.
(Reporting by Shailaja Sharma in Bengaluru; Editing by Saumyadeb Chakrabarty, Bernard Orr)