PartyGaming and Bwin have agreed to merge to create the world's largest online gambling company, as the expected consolidation in the market takes shape.
The merged entity would have annual revenues of €682m (£572m), based on pro-forma 2009 data, and underlying earnings of €196m. The agreement follows recent proposals to change the regulatory gambling regimes in countries including the US, France, Canada, Italy and Spain.
Gibraltar-based PartyGaming would own 48.36 per cent of the enlarged group, while Bwin, the poker specialist based in Austria, would have a 51.64 per cent stake. Both companies have estimated annualised cost savings of €55m and expect the merger to enhance earnings "significantly".
Jim Ryan, the chief executive of PartyGaming, said: "This is a transformational opportunity for both companies to create the world's largest listed online gaming business." Investors accounting for 28.5 per cent of PartyGaming's shares and 14.4 per cent of Bwin's have backed the merger.
The US authorities banned online gaming in the country in 2006, but earlier this week The House Financial Services Committee voted through measures that would lead to the legislation being overturned.
Both companies forecast that "the online gaming industry is now entering a new phase of development, one that will contain more regulated territories, each with different requirements where private, publicly quoted and state-owned gaming operators will be able to compete."