The discussions concern combining Ladbrokes with Coral Retail, Eurobet Retail and Gala Coral’s online firms.
Ladbrokes said there was no certainty that the talks would lead to a deal, and possible terms and timings were also yet to be agreed, the BBC reports.
In February, Ladbrokes said it was to close 60 UK shops after a big fall in 2014 pre-tax profit.
Ladbrokes chief executive Jim Mullen said: “A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies’ shareholders.”
He added that the firm’s board has yet to decide whether a deal would be “strategically attractive” and whether it could be “delivered to shareholders on appropriate terms.”
The firm added that the deal, if completed, could be classified as a reverse takeover of Ladbrokes.
Ladbrokes previously attempted to buy Coral in 1998, but its planned takeover was blocked by the government.
The then Trade and Industry Secretary Peter Mandelson said a merger would lead to “a weakening of price competition at the national level” and a reduction in consumer choice.
Earlier this year, Ladbrokes reported a large fall in pre-tax profit for 2014, from £68m to £38m, and said that it expected to close 60 UK shops this year.
Those plans would be unaffected by any deal with Coral Group.
