Bookmaker Ladbrokes is in merger talks with Gala Coral to create a new powerhouse in the betting arena.

The FTSE-250 listed firm has 2,150 betting shops, and buying Gala Coral’s 1,800 betting shops, its online business and Italian brand Eurobet would put Ladbrokes well ahead of William Hill which has about 2,400 shops.

Creating the largest betting company could prompt scrutiny from competition regulators. Ladbrokes was thwarted in its attempts to buy Coral in 1998, when trade and industry minister, Peter Mandelson, said it would damage competition.

In a statement issued last night, Ladbrokes said: “Shareholders are advised that there can be no certainty that the discussions between Ladbrokes and Gala Coral will lead to any agreement concerning the possible merger or as to the timing or terms of any such agreement and there can be no assurance that, even if reached, any such agreement would be completed.”

Jim Mullen, chief executive of the company added: “A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies’ shareholders.”

If the discussions move forward, Ladbrokes may take steps to strengthen the balance sheet of the combined company by placing shares.