Partygaming shares have jumped by nearly 25 percent after they confirmed the long awaited announcement that it is to merge with Austrian rival Bwin to create the world's biggest listed online gaming business.

Bingosupermarket has reported on the rumours of the two companies merging over the last 12 months and we were not surprised at the announcement today. The deal which is worth more than €2bn is expected to be completed in the first quarter of next year. PartyGaming shareholders will own 51.64% of the new group, which will be listed in London. It will be run jointly by the current chief executives of the existing businesses, Jim Ryan of PartyGaming and Norbert Teufelberger of Bwin.

The “merger of equals” would create a company with pro forma gaming sales of 682 million euros ($892 million) last year, and earnings before interest, taxes, depreciation and amortization of 196 million euros “before synergies,” the two companies said in a statement today.

The news follows the latest stage in the deregulation of the key US market, when a senate committee voted through Barney Frank's online gaming bill. The next step would be for it to be put to the vote by the House of Representatives. Collins Stewart analyst Simon Davies said:

At this stage it is probably the most positive step towards the reopening of the US online gaming market since 2006. The US market was 50% of the global online gaming market prior to it being "closed" and is still 25%. PartyGaming was set to make $750m of profit in 2006, prior to withdrawing from the US and is set to make only $140m this year.

Jim Ryan commented: ‘With market-leading positions in poker, sports betting, casino and games (in particular bingo), the enlarged group will have a winning formula to exploit the growing online gaming market, supported by a strong balance sheet, significant cashflow generation and a highly experienced management team.’

Bwin’s co-chief executive Norbert Teufelberger said: ‘This merger of equals makes great strategic, operational and financial sense: we will be in pole position to capitalise on the wealth of opportunities that will flow from the continued evolution and expansion of the global online gaming industry.’

PartyGaming shares rose as much as 30 percent, the most on record, to 333 pence and traded at 321.5 pence as of 11:48 a.m. Bwin shares rose 12 percent to 39.91 euros and were suspended at 12:15 p.m. in Vienna.