A MERGER of Paddy Power and Betfair would create one of the world's biggest gambling businesses.
The bookmakers are in talks to join together in a move that would create a chain with revenues of £1.1 billion.
Both firms cautioned there was no guarantee the deal would go through but they expect to make a further announcement in coming weeks.
The boards have agreed in principle to rebrand the merged businesses as Paddy Power Betfair, with Paddy Power shareholders owning 52 per cent and Betfair 48 per cent.
In a statement issued to the stock exchange they said: "The possible merger would create one of the world's largest public online betting and gaming companies by revenue with enlarged scale, capability and distinctive and complementary brands.
"The combination has compelling strategic logic and represents an attractive opportunity for both companies to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value."
If the merger is successful Paddy Power shareholders would receive a special dividend of £58m.
Other changes would see Breon Corcoran, Betfair chief executive, become the new company head.
Both companies said the deal is being finalised with a view to maximising benefits to shareholders and other stakeholders and it is expected that the new brand will maintain a significant presence in Ireland and in the UK.
It also pointed to attractive international growth opportunities across continental Europe, the US and Australia.
The merger of such two big players in the bookies market, particularly online gambling, follows plans by Ladbrokes to merge with Gala Coral in a deal worth £2.3bn.
That new company would overtake William Hill as the biggest bookmaker in Britain but the potential second merger involving Paddy Power and Betfair would see three global giants of gaming, betting and online gambling.
