Paddy Power and Betfair surprised investors this morning by announcing that they hope to merge, subject to the backing of their shareholders and approval from competition authorities.

The companies issued a joint-statement signalling their intention to come together on the day that Paddy Power released its interim half-year results, and Betfair announced strong first quarter returns.

Revenues rose by 25% while earnings before interest and tax were up 33% to €80m – more than half of which was generated in Australia where trading profits rose by 70%.

Andy McCue, Chief Executive, Paddy Power plc, said: "We have made substantial progress implementing the strategy we set out in March, with further payback to come from new mobile product releases, refreshed marketing campaigns and efficiency gains.

"We now expect full year 2015 reported operating profit to be a mid to high single digit percentage above 2014 and the consensus market forecast.”

Betfair also announced very strong first quarter earnings today, its EBITDA figure is £41.0m, that's up 19% year-on-year and ahead of forecasts.

Revenue increased by 15% to £135.4m despite the fact that the FIFA World Cup took place in the corresponding period last year.

Mobile revenues were up by 57%, with three quarters of the firm's UK customers now using mobile.

Breon Corcoran, Betfair’s Chief Executive Officer, commented:

“These results represent another strong performance. Double-digit revenue growth against the period containing the World Cup last year is particularly encouraging and was ahead of our expectations."

Newstalk understands that merger talks between the two companies only commenced in recent weeks, and have progressed rapidly - and that the plan was prompted by recent consolidation in the industry, such as the merger of Ladbrokes and Gala Coral.