Online gaming software firm GigaMedia Ltd said it would sell 60 percent of its online gambling software business to France's Mangas Gaming, sending its shares up as much as 15 percent.

Mangas will make an up-front cash payment of $100 million at the closing of the deal, which is expected in the first quarter of 2010, and a final earn-out payment depending upon the fair market value of the business in early 2012, GigaMedia said.

The way the deal is set up provides a big opportunity in terms of a higher valuation of the online gambling software business, ThinkEquity LLC analyst Atul Bagga said.

It makes a lot of sense for GigaMedia not to seal the sale price now as the opportunity and valuation could be much bigger if and when online gambling is legalized in the United States, Bagga said.

The U.S. Treasury and Federal Reserve in November delayed the implementation date for a new Internet gambling payment ban for six months, a move that gives lawmakers time to overturn it or end confusion over illegal practices.

GigaMedia, which expects to book a substantial one-time gain, said it will hold the remaining 40 percent interest with a put option to sell all or part to Mangas beginning in 2013.

In 2015, Mangas will have a call option on any remaining interest held by GigaMedia.

Shares of Taipei, Taiwan-based GigaMedia were up 8 percent at $4.08 in afternoon trade Wednesday on Nasdaq. They touched a high of $4.34 earlier in the session.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Anne Pallivathuckal)