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UPDATE 1-Gambling firm 888 in talks to buy William Hill's non-U.S. assets

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(Adds analyst comment, background, shares)

Sept 7 (Reuters) - British gambling group 888 said on Tuesday it was in advanced talks with Caesars Entertainment for a possible acquisition of the international operations of the U.S. company's William Hill business.

The brief statement followed a Times report that said 888 had outbid Apollo for the assets, which became part of Caesars when it took over London-based William Hill in a $4 billion deal earlier this year.

"Such a deal would create a materially larger business, relevant to many more investors, with a period of synergy extraction ahead to offset any negative regulatory changes, particularly in the UK," Peel Hunt analysts wrote in a note.

"We would expect management to make a good case for enhancing the online business and extracting at least marketing value from retail."

Shares of 888, which have surged in value during the pandemic amid a spur in online betting volumes during lockdowns, were up about 2% at 414 pence by 1102 GMT, outperforming the broader midcap index's 0.2% dip.

Caesars Entertainment's acquisition of William Hill was part of a wider consolidation in the gambling industry, with American companies buying out London-listed groups to gain more expertise as the United States opens up to sports betting.

The British firm did not respond to a Reuters request for comment regarding how it would fit William Hill's assets with 888's existing betting platforms, which are exclusively online.

(Reporting by Muvija M in Bengaluru; Editing by Saumyadeb Chakrabarty and Krishna Chandra Eluri)