Paddy Power and Betfair have agreed on the terms of a recommended £5b all-share merger, to create a new FTSE 100 betting giant.

Paddy Power Betfair will have combined annual revenues of more than £1.1b, bringing together Paddy Power’s 336 retail betting shops in the UK and 252 stores in Ireland with Betfair’s online betting exchange.

The merger, details of which were first announced last month, will result in Paddy Power shareholders owning 52% of Paddy Power Betfair and Betfair shareholders owning 48% on a fully diluted basis.

Paddy Power shareholders will receive a special dividend of €80m just before the deal closes.