Playtech PLC on Wednesday said it was holding talks with Flutter Entertainment PLC regarding the possible sale of its Snaitech business.
The Isle of Man-based gambling software development company said that Snaitech, its Italian gambling unit, could be valued at around £2 billion.
Shares in Playtech leapt 19% to 641.24 pence in London on Wednesday, giving the company a market value of £1.98 billion.
Playtech said it had granted Flutter, which owns betting firm Paddy Power, a period of exclusivity to complete due diligence and finalise the necessary transaction documentation.
Shares in Flutter, which recently moved its main listing to the US, were 8.7% higher at 15,925.00p in London on Wednesday.
On Wednesday, Flutter raised guidance after reporting strong financial results for the second quarter with significant improvements to revenue and profit, partly thanks to favourable results for the company from betting on the Euros.
Pretax income more than doubled to $350 million in the second quarter that ended June 30, from $150 million the previous year, while revenue increased 20% to $3.61 billion from $3.00 billion.
Flutter raised its full-year guidance in light of this strong quarterly performance.
It expects US revenue to be between $6.05 billion and $6.35 billion, up from guidance of $5.8 billion to $6.2 billion previously. US adjusted Ebitda is forecast to be within a $680 million to $800 million range, ahead of $635 million to $785 million before.
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