Shares in Ladbrokes shot up 16 per cent to 141.68p per share this afternoon, after it confirmed reports that it was in merger talks with rival gambling company Gala Coral.
Ladbrokes said it was interested in merging its business with Coral Retail, Eurobet Retail, as well as Gala Coral's online businesses.
It would give the two businesses 4,000 betting shops and help them close the gap on market leader William Hill which has benefited from stronger growth in its online business.
However, it cautioned that there's no guarantee the discussions would lead to an agreement, and even if an agreement is reached it won't necessarily complete.
"Since becoming chief executive my focus has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels, which is key to creating a more sustainable and growing Ladbrokes. My plans are well advanced and I look forward to presenting them to shareholders," Jim Mullen, chief executive of Ladbrokes, said.
"A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies' shareholders."
"The board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms."