LONDON (AFX) - Privately owned bingo and casino operator Gala is in talks to buy Coral Eurobet, the bookmakers chain that is preparing to float at the end of this year or in early 2006, according to newspaper reports.

Both the Times and the Financial Times said Gala, in which private equity firm Permira has a 30 pct stake, is holding preliminary discussions that could lead to a creation of a 4 bln stg bookmaking business to rival Hilton Group PLC's Ladbrokes and William Hill PLC.

Coral has been considered a bid target since the recent appointment of US investment bank Lehman Brothers as an adviser to a possible 800 mln stg flotation.

The Times said that, if Gala is successful in its takeover of Coral, the enlarged group would pursue an initial public offering within 18 months to two years. It would be an almost certain candidate for the FTSE 100 index.

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