Gambling group Betfair and rival Paddy Power have agreed the terms of a £5billion merger to create a new Dublin-based online gaming giant to be called Paddy Power Betfair.
On completion of the merger, Paddy Power shareholders will own 52 per cent of the new entity, while Betfair shareholders will hold 48 per cent.
The merger will result in the creation of one of the world's biggest online gambling groups, with 7,000 staff and approximately £1.2billion in sales.
But with plans for around £50million in annual cost savings, job losses could be on the cards if the merger goes ahead, the firms warned.
The companies said that while no decisions on job losses have been taken, there is potential for cutbacks in some operational and support functions, which 'may involve some headcount reduction.'
Gerald Corbett, Betfair's chairman, said: 'The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands.
'Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.'
The deal - dubbed 'Betty Power' in the industry - will bring together Paddy Power's 336 shops in the UK and 252 stores in Ireland with Betfair's online betting exchange.
According to industry data, the new group would enjoy a 16 per cent share of the UK online gambling sector, surpassing that of the soon to be merged Ladbrokes Coral Group on 14 per cent, as well as current market leader William Hill and privately-owned Bet365.
Both companies will continue to run separate brands in the UK, Ireland and Italy after the merger.
Around 80 per cent of the newly merged group's annual revenues are expected to stem from online business.
Betfair boss Breon Corcoran will become the new group's chief executive and the firm will be listed on the London Stock Exchange and the Irish Stock Exchange.
The firms confirmed Paddy Power shareholders will receive a special dividend of £58million.
Shareholders are expected to vote on the deal in December, with the merger due to complete in the first quarter of 2016.
Against a backdrop of higher taxes in the UK and tighter regulation,the betting industry has seen a string of deals this year as firms bid to secure their slice of the competitive online gambling market.
Aside from the Ladbrokes and Gala Coral all-share deal agreed in July, GVC Holdings last week looked to have won a bidding war for online poker firm Bwin.party Digital Entertainment, squeezing out a rival bid from 888 Holdings.
Commentators have suggested that, as a result, a marriage of William Hill and 888 could now also be on the cards.