Bookmaker Ladbrokes Coral has agreed to a takeover by online rival and Foxy Bingo owner GVC in a deal worth up to £4bn.
The pair had said earlier in December that they were in “detailed” discussions over a cash and shares tie-up.
The takeover comes after two previous attempts at a combination between the pair.
The deal will involve the creation of an online-led global gambling giant, combining Ladbrokes’ high street and online operations with GVC’s stable of brands, including Sportingbet and PartyCasino.
The terms of the takeover will involve GVC owning about 53.5% of the enlarged group and Kenneth Alexander, its chief executive, will take charge.
The deal follows mounting pressure on the betting industry over betting machines which have been blasted for being the crack cocaine of gambling.
A review of the machines is expected to cut the amount of revenue they bring in.
John Kelly, chairman of Ladbrokes Coral, said: “Ladbrokes Coral board believes that the proposed combination with GVC accelerates our strategy to improve the customer experience, drive faster online growth and build a more diverse and extensive international portfolio of businesses.
“The acquisition has compelling strategic rationale allied to an opportunity to use the best of both from proven management teams and will create material shareholder value.
“It secures earlier delivery of our long-term value potential, which is why the board of Ladbrokes Coral has unanimously recommended GVC’s offer.”
The combination will result in cost savings of at least £100 million a year, the two companies said.
The initial value of the deal stands at £3.2bn which will rise to £4bn under certain circumstances.
More from Business
The terms of the deal will mean Ladbrokes Coral shareholders will be entitled to 32.7p in cash, 0.141 ordinary GVC shares and a contingent entitlement of up to another 42.8p.