Based on the share prices of the two companies at close of business on 6 December, the possible offer values Ladbrokes Coral at 160.9p per share, plus a CVR of up to 42.8p per share.
GVC chief executive Kenneth Alexander is expected to lead the combined group, although the firms said plans for the final management line-up would be worked out over the coming weeks.
GVC said it expects "material synergies" from a merger with Ladbrokes, which it would lay out in any forthcoming firm offer.
The firms said: "The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector".
The companies had previously held talks about a deal earlier this year but they broke down without agreement.
Ladbrokes and GVC announce 'detailed' merger talks
The shares of Ladbrokes Coral rose 25 per cent following the announcement, while those of GVC climbed 7 per cent.
Wilson suggested that if the triennial review sees the government tightens the rules somewhat but stays short of imposing a £2 stake limit on betting machines, this could see the offer for LCL rise to somewhere in excess of 180p, "which looks a healthy premium given the regulatory overhang".
"Whilst this deal was always likely, most had thought GVC would wait until the government's triennial review of fixed odds betting terminals was finished before it would happen".
The companies added that a merger would enhance the enlarged group's position in a number of regulated online gaming markets, including the UK, Italy and Australia, and would boost GVC's current share of revenues from locally regulated and taxed markets to more than 90%. There could also be synergies from the deal, while the Board of GVC also believes that the transaction would be double digit EPS accretive from the first full year post-completion. If the maximum stake is cut to only £50 from £100, shareholders are set to receive the maximum distribution.
"GVC's recent move to exit Turkey cleared the last barrier and LCL shareholders should be pleased to see the firm is now better insulated against the vagaries of the United Kingdom market", said Neil Wilson, senior market analyst at ETX Capital.
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