ent processing provider Optimal Payments has announced it has entered discussions with digital payment company Skrill over a €1.1bn acquisition to allow Optimal Payments to challenge its competitor PayPal.

Skrill is majority owned by private equity firm CVC Capital Partners, which acquired a majority stake in the business for €600m from investment fund Investcorp in 2013 and finalised its acquisition of a majority stake in operator Sky Betting and Gaming last week.

Skrill’s paysafecard brand allows customers without a bank account or credit card to purchase goods and services online and Optimal Payments has said the deal will allow it to expand into the online gaming sector.

Shares in Optimal were suspended on Monday morning following the announcement of the planned acquisition.

Optimal Payments president and CEO Joel Leonoff said: “PayPal is the 800 pound gorilla in this industry, and while I’m not sure we’re in their rear view mirror yet, there’s room for a number two.

“Over the past four years, we have successfully delivered significant growth in revenues and earnings for our shareholders.

“The acquisition of Skrill will create a global tech champion in the fast growing digital payments space and we believe represents a transformational leap forward that greatly accelerates our strategic plan.”