By Jonathan Davies

Betfair and Paddy Power are set to merge, creating one of the world's largest online betting firms.

Paddy Power will own 52% of the new company, with Betfair taking the remaining 48%. It is expected that the new company will generate a combined revenue of more than £1 billion.

Betfair boss Breon Corcoran will become chief executive and Paddy Power's boss Andy McCue is to become chief operating officer.

Betfair shares jumped 18% on the news and Paddy Power rose 15% in Dublin. Based on their closing prices, taking out the effect of these rises, would give the combined betting giant a value of around £5bn.