Ladbrokes has confirmed it will merge with rival gambling company Gala Coral to create a bookmaking giant with a market value worth £2.3bn.
Shares in Ladbrokes opened two per cent down on the news.
With an expected 4,000 shops, Ladbrokes Gala Coral will overtake William Hill to become the biggest high street betting agent.
The new combined company will have net revenue of £2.1bn and deliver cost synergies of £65m a year, Ladbrokes said in a statement to the London Stock Exchange.
FTSE 250-listed Ladbrokes will issue new ordinary shares to existing shareholders of Gala Coral representing 48.25 per cent of the enlarged issue share capital of the combined business.
Existing Ladbrokes shareholders will own 51.8 per cent of the company.
Ladbrokes chairman Peter Erskine said the deal was a "major strategic step" for Ladbrokes.
Together we will create a leading betting and gaming business combining strong brands with an attractive multi-channel offering and an extensive national and international coverage. The transaction will provide an attractive opportunity to generate considerable value for both sets of shareholders, through significant operating synergies and a strong cash flow profile.
Ladbrokes will place 92.4m shares in the company to fund the deal, with partner Playtech - the online betting company - taking 22.9 per cent "as a demonstration of its support" for the merger.