Playtech shares soared 57% to a three-year high and were trading 6.5 pence short of the offer price of 680 pence per share. Aristocrat Leisure shares are on a trading halt until Oct. 21.
A shift to online betting amid the pandemic has prompted consolidation in the industry, with UK-based Entain being approached by U.S. fantasy sports company DraftKings last month.
Australia-listed Tabcorp Holdings also received multiple bids earlier this year for its wagering unit.
Separately, Playtech said its largest shareholder with a stake of about 21% had backed the offer. The company also added that it would recommend stakeholders vote in favour of the deal as the combined group would be well-placed in a sector going digital.
"The business will be ideally positioned to unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG segment as they continue to open up, particularly in North America," Aristocrat Chief Executive Officer Trevor Croker said.
The Australian company said it would fund the deal with a A$1.3 billion ($964.21 million) equity raising, alongside new debt and existing cash. It expected a boost to earnings from the first year of closing the deal.
($1 = 0.7273 pounds)
($1 = 1.3483 Australian dollars)
(Reporting by Anushka Trivedi and Harish Sridharan in Bengaluru; Editing by Peter Cooney, Diane Craft and Anil D'Silva)