William Hill and GVC Holdings said they were in the early stages of putting together a joint bid for online gaming group Sportingbet.
The two firms said they envisaged an offer that would leave William Hill with Sportingbet's core Australian market and certain other locally licensed businesses, with GVC acquiring the remaining parts.
Sportingbet shares were up almost 13% following the announcement.
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"The boards of William Hill and GVC believe that by acting in combination they represent a highly credible possible offeror for the entire Sportingbet business, substantially in cash," the statement said.
"No formal approach has been made to the board of Sportingbet and there can be no certainty that any offer will be forthcoming and nor as to the terms on which any offer might be made."
William Hill would use a subsidiary of William Hill and not William Hill Online to do the deal, but said it and GVC reserved the right to amend the terms and structure of the possible offer in due course.
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