Betting firms Ladbrokes and Gala Coral have agreed a merger to create a £2.3 billion gambling giant.
It is expected to overtake William Hill as the biggest bookmaker in the UK, although it is expected to have to dispose of some stores to satisfy any concerns about the deal from competition regulators.
The move brings together 2,100 shops from Ladbrokes and 1,845 from Coral.
Talks about the merger were first made public last month.
Ladbrokes Coral will have net revenue of £2.1 billion and underlying earnings of £392 million, while the deal is expected to bring savings of £65 million a year.
Ladbrokes last made a major expansion move in February 2008 when it paid £117.5m for the Eastwood bookmaking chain built by businessman and boxing promoter Barney.
The firms said it would be the largest licensed betting office network in the UK, which would be “more efficient and sustainable in the long term”.
Ladbrokes chairman Peter Erskine said: “This is a major strategic step for Ladbrokes which firmly accelerates our strategy to improve the customers’ experience and build recreational scale.
“Ladbrokes and Coral are two highly complementary businesses, with rich heritage and brand presence across the UK and internationally.
“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.
Jim Mullen, chief executive of Ladbrokes, will retain the position at the new business while Gala Coral boss Carl Leaver will be executive deputy chairman for 12 months after completion of the deal.
The announcement came as Mr Mullen said Ladbrokes was embarking on an “urgent, overdue and essential” three-year investment programme to boost revenues in its shops and grow its online business.
He warned that it would mean operating profits for the current year £20m lower than expected and slashed the full-year dividend to 3p, down from 8.9p the year before. Shares fell one per cent.
Ladbrokes released a half-year trading update showing operating profits down 38.2 per cent to £41.7m as Mr Mullen said “results have continued to favour our customers”.
Meanwhile it is placing 92 million new shares representing up to around 10 per cent of the company with new and existing investors to boost the balance sheet of the enlarged group.
Under the merger, both brands will continue to operate separately, “enabling us to give our existing loyal customers a consistent experience with the brands they favour, whilst providing additional products and best operating practices to both brands”.