Bookmaker GVC Holdings has offered to buy Ladbrokes Coral for up to $5.2 billion to create a global online and high street betting giant able to take on rivals and cope with a tougher regulatory environment.
GVC, which boasts 79 million registered accounts and operates in 21 languages through names such as sportingbet and partypoker, previously bought bwin.party in 2016.
The two groups said in a joint statement on Thursday they were in detailed talks over a deal that would give Ladbrokes shareholders around 46.5 percent of the combined group.
Shares in the 230-year-old Ladbrokes jumped 26 percent in early trading, while GVC shares rose 6 percent on confirmation of the long-rumored offer, which is in cash and shares.
The final price will depend on the outcome of a government review into fixed-odds betting terminals (FOBTs). The machines are big moneyspinners for companies like Ladbrokes but they have come under fire for leaving gamblers with very heavy losses.
"The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector," the companies said.
"The enlarged group would be geographically diversified with a large portfolio of businesses across both regulated and developing markets, with the scale and resources to address the dynamics of a rapidly changing global industry."