High street bookmaker Ladbrokes Coral has reopened talks about a takeover by online rival and Foxy Bingo owner GVC in a deal worth up to £3.9 billion.
Shares in Ladbrokes raced as much as 34% higher after the pair revealed "detailed" discussions over a tie-up that would see GVC pay £3.1 billion in cash and shares for Ladbrokes.
The final price could reach £3.9 billion, depending on the outcome of a government review into controversial fixed-odds betting terminals (FOTBs).
The talks come after two previous attempts at a deal between the pair, with the most recent discussions breaking down in the summer over price and amid uncertainty ahead of the Government's gambling review.
The deal would create an online-led global gambling giant, combining Ladbrokes' high street and online operations with GVC's stable of brands, including Sportingbet and PartyCasino.
Under the terms of the potential takeover, GVC would own around 53.5% of the enlarged group and its chief executive, Kenneth Alexander, would take the reins.
But the firms said plans for the final management line-up would be worked out over the coming weeks.
They said: "The enlarged group would be an online-led, globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector."
GVC has said it would be prepared to offer up to £3.9 billion if the review of FOTBs sees the maximum stake cut from £100 to £50.
But many in the industry believe it could be slashed to £20 or even as little as £2, which would see the value of the takeover offer fall to the minimum of £3.1 billion.
It comes amid a wave of consolidation in the sector, which has been under pressure pending the review, which is expected to significantly cut earnings from the lucrative betting machines - dubbed the crack cocaine of gambling.
Ladbrokes completed its £2.3 billion merger with Gala Coral in November last year, but it is understood GVC first approached Ladbrokes over a takeover when it was finalising the deal.
GVC - whose shares rose around 8% after the talks were announced - said it expects "material synergies" from a merger with Ladbrokes, which it would lay out in any forthcoming firm offer.
The combined group would have beefed up operations across some of the world's biggest regulated online gaming markets, including the UK, Italy and Australia.
Neil Wilson, senior market analyst at ETX Capital, said: "GVC got lucky at the third attempt and Ladbrokes Coral shareholders can count their winnings."
He added: "As long as GVC was willing to pay the right price, the tie-up has always made sense - the Isle of Man firm has little debt and has the global and fast-growing online presence; Ladbrokes Coral has the physical footprint, high street name and sports book."
Ladbrokes has nearly 3,700 bookies on the high street and more than 25,000 staff, while GVC has a raft of brands after a series of acquisitions, most recently snapping up bwin.party in February last year.
GVC employs 2,800 employees and contractors throughout 15 offices globally.