Shares in 888 Holdings have jumped more than 20% after The Times reported that William Hill had held advanced talks over a £750m takeover of the online gambling company.
The report said William Hill, Britain's largest bookmaker, had reached a preliminary agreement with the 888 board over a 210p a share offer, as it seeks to accelerate the growth of its online operations.
Both 888 and William Hill declined to comment.
Shares in 888 were up 24% at 180 pence at 2.20pm Irish time, with trading volumes nearly five times the stock's daily average. William Hill shares fell 1.2% at 384.9 pence.
The Times report, citing industry sources, said talks could yet stumble as one of 888's Israeli founders, thought to be the Shaked family, wanted 300p a share.
William Hill has offered both the Shaked and Ben-Yizhak families, which together own about 60% of the shares, the choice of taking either cash or paper.
Consolidation is accelerating in the online gambling sector as firms seek growth as taxes rise and regulation increased in their main markets.
In November, online gambling firm Bwin.Party said it was considering a range of proposals from interested parties. It has appointed Deutsche Bank to handle talks.
