Online betting group Sportingbet's shares soared by 13% after it confirmed that rival bookmaker, Ladbrokes, had made a "preliminary approach" for the group.
Shares jumped by 5.5p to 48p, even though Sportingbet, which takes in nearly £2bn a year in bets, stressed that the approach "may or may not lead to an offer being made".
Analysts expect that Ladbrokes, which three weeks ago failed to land Wink bingo owner 888, could be looking to offer at least 70p a share, equivalent to about £450m.
James Hollins, analyst at Evolution Securities, said the deal made "sound strategic sense for Ladbrokes".
He said: "We think the mooted deal firmly fits with Ladbrokes' desire to expand its international online opportunities and a bid value of 80-90p/share is a suitable valuation for both sides".
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