A new market leader will emerge in the U.K. radio sector with the proposed merger of Capital Radio and GWR Group, in a stock deal announced today (Sept. 29).

A new market leader will emerge in the U.K. radio sector with the proposed merger of Capital Radio and GWR Group, in a stock deal announced today (Sept. 29).

The new company will comprise such stations as London leader Capital Radio, GWR's national station Classic FM and several dozen local outlets throughout the territory. The combined assets will include one national and 55 local analog radio stations, and 93 digital stations. Overall, the group's outlets will reach approximately 18 million listeners, or 36% of the U.K. commercial radio audience, according to audience research organization RAJAR.

The merged company, which has yet to be branded, will control about 40% of the £600 million ($1.08 billion) U.K. radio advertising market and will have a market capitalization of about £740 million ($1.34 billion), based on current trading prices.

GWR executive chairman Ralph Bernard and Capital Radio CEO David Mansfield will hold similar roles in the new company. "The enlarged group will be in a strong position to drive the growth of commercial radio's share of listening and total advertising by providing enhanced services to listeners and greater opportunities for advertisers," Bernard says in a statement.

Based on the current issued share capital of the two companies, Capital Radio shareholders will hold 52% and GWR shareholders will hold 48% of the issued share capital of the merged company.

The merger still needs to be approved by media regulator Ofcom and will be reviewed by the European Competition Commission and the U.K.'s Office of Fair Trading. If regulators do not launch a full investigation into the merger, the deal could close by the end of the year. Otherwise, a complete review process is likely to last about a year.