Gambling companies Betfair and Paddy Power have confirmed an agreement on a £5bn FTSE 100 merger after weeks of talks.

The firms announced on 26 August that a conditional deal was reached and announced on 8 September that they are officially starting the process of the merger, which would create a company with a revenue of more than £1bn.

Gerald Corbett, Betfair's chairman, said that the merged company would be one of the world's largest public online betting and gaming firms. He said: "The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands.

"Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value."

The merged firm would be called Paddy Power Betfair, although the Irish bookmaker had joked on twitter that the company's name would be 'Betty Power' after rumours of the tie-up surfaced.

Paddy Power shareholders will hold a total of 52% of the stake in the company, with Betfair investors holding 48%. The latter's current chief executive Breon Corcoran will be the head of the merged company and Paddy Power's chairman Gary McGann is also keeping his position.

The companies announced that KPMG would act as reporting accountant to Paddy Power, while Morgan Stanley has been chosen as financial adviser overseeing the merger. Both companies saw their share prices gain slightly on confirmation of the tie-up. When the merger was announced in August, the bookmakers' share prices both jumped more than 20%.

The takeover is the latest of many mergers and acquisitions in the betting markets, where companies are surviving in an environment of strict regulation and complicated tax laws. Earlier in September, GVC announced it is buying Bwin after Gala Coral and Ladbrokes merged in July.