The surprise in merger discussions between Capital Radio and GWR Group is that the deal has taken so long to surface. Investors hoping for a contested bid, however, may be disappointed.

The deal appears logical, uniting GWR's national analogue licence Classic FM with Capital's strong London presence. The new entity would have 40 per cent of the national radio advertising market, but, with little geographical overlap, would probably gain regulatory approval. Alternative deals involving Capital and rivals Emap and Chrysalis would be unlikely to be allowed. In any event, Emap holds 27 per cent of Scottish Radio Holdings, which suggests its focus may lie there. Chrysalis could get involved with GWR, but might not have the appetite to muscle in on long-running talks with Capital. Intervention by overseas buyers, such as Clear Channel of the US, is possible. But higher valuation multiples in the UK and a weak dollar suggest it is unlikely.

To whom estimated cost synergies of ?8m-?10m accrue will depend on the deal's precise terms. Taxed and valued at a multiple of 10 times, they are worth ?56m-?70m. In aggregate, this is smaller than the ?98m increase in the combined market capitalisation of GWR/Capital to ?778m since bid rumours intensified a week ago. Revenue synergies, meanwhile, are notoriously difficult to achieve, especially given the trend towards digital radio bringing an ability to skip advertising. Most of the fun for investors in this long-awaited deal may be over.