Gambling giant Ladbrokes Coral could be taken over by bookmaker GVC Holding in a deal worth £3.9bn.
The two companies in a joint statement on Thursday said that they were in detailed discussions regarding the possible combination of their two businesses.
A potential deal would give Ladbrokes Coral shareholders around 46.5 per cent of the combined group. GVC shareholders would be entitled to the rest.
“The boards believe that a transaction has the potential to create material shareholder value and that there is a compelling strategic rationale for the possible offer,” the two said in the statement.
They added that the enlarged group would benefit from operating different brands across different markets including the UK, Italy and Australia.
Ladbrokes Coral and GVC Holding said that Thursday’s announcement does not amount to a firm intention to make an official offer. Any transaction would also be subject to regulatory approvals, and shareholder approval from both companies.
Under UK regulation, GVC is required, by not later than 5pm on 4 January next year, to either announces its firm intention to make an offer for Ladbrokes Coral or to announce that it does not intend to do so.
Ladbrokes Coral was created out of the merger of Ladbrokes and Gala Coral in November last year. It’s a member of the FTSE 250 index.
GVC Holdings is also listed on that same stock index and operates brands including bwin, Sportingbet and gamebookers.