Paddy Power and Betfair wager on huge merger

Irish bookmaker Paddy Power and British online sports betting firm Betfair are set to merge, the pair announced Wednesday in a deal that will create a global gambling giant.

Management at both companies have agreed "in principle" on the key terms of a potential merger giving Paddy Power shareholders a 52 percent stake and Betfair the remaining 48 percent.

The merger of two big players in the sector comes after rival bookmaker Ladbrokes unveiled plans in July to merge with Gala Coral in a £2.3-billion deal.

The new unified group -- to be called Paddy Power Betfair -- will have combined revenues of more than £1.1 billion (1.5 billion euros, $1.7 billion).

"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," they said in a statement.

"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."

The combined group  would maintain a "significant" presence in Ireland and the UK.

Discussions remain ongoing regarding the other terms of the possible merger deal.

Both companies cautioned there was no guarantee the deal would go through but they expect to make a further announcement in coming weeks.

Paddy Power was founded in 1988 by the merger of three existing Irish bookmakers, and now has 350 betting shops. It is now the third largest online bookmaker and sixth largest online gaming company in Britain and Ireland.

Online group Betfair, meanwhile, is one of the pioneers of person-to-person sports betting, offering a market place -- or betting exchange -- that allows customers to bet at odds sought by themselves or offered by other customers, bypassing the need for a traditional bookmaker.

Betfair was launched in 1999 and floated on the London stock market in 2010.