Paddy Power is one of the biggest, most outlandish names in bookmaking today, especially well known for their shops in Ireland and the United Kingdom.
Betfair is one of the leaders in online bookmaking, with their betting exchange being the most popular way for gamblers to bet against each other in the world.
Alone, each of these two companies has proven to be a major player in the gambling industry.
Together, they might just be the biggest bookmaking operation in the world.
Paddy Power and Betfair have agreed in principle to a £5 billion merger, one that will make the company the market leader in the UK and a major competitor in Australian and throughout Europe as well.
The combined company, which would take the name Paddy Power Betfair, would have annual revenues of more than £1.1 billion ($1.7 billion).
The move would continue an ongoing pattern of consolidation in the gambling industry.
While this is happening around the world, it has been particularly prevalent in the UK and Europe, where increased regulation and taxation of the gaming industry has caused companies to look for ways to cut costs.
One way to do this is to consolidate their businesses, increasing the scale of the combined companies while also reducing overhead by merging redundant departments.
In just the last few months, there has been plenty of chatter about mergers between gambling companies as well as a handful of actual deals.
Over the past month, there has been plenty of drama created by an attempted takeover of bwin.party, the online gambling firm that has been looking to sell off some or all of its assets to a suitable buyer.
While 888 Holdings seems to have the upper hand in negotiations at the moment, GVC Holdings is still trying to win over bwin executives by promising an even bigger bid.
Other mergers have been more straightforward in their execution. Last month, Ladbrokes merged with Gala Coral in order to consolidate into a larger force on the UK bookmaking scene, creating a combined company worth £2.3 billion ($3.56 billion).
While the exact details of the merger between Betfair and Paddy Poker have yet to be determined, the two companies did issue a press release on Wednesday that outlined the general terms of the deal.
“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,” the statement read. “The combination has compelling strategic logic and represents an attractive opportunity for both companies to enhance their position in online betting and gaming.”
When the companies are combined, Paddy Power shareholders would take over the majority of the new firm, owning 52 percent of the group, with Betfair shareholders taking the other 48 percent.
Paddy Power shareholders would also split a special dividend worth €80 million ($90.7 million) just before the deal is completed.
Paddy Power chairman Gary McGann would take over as Chairman of the Board for the combined group. Betfair CEO Breon Corcoran, who previously served as the COO for Paddy Poker, would become the CEO of the new group.