BRMB and Beacon parent group GCap Media yesterday confirmed it had rejected an approach from rival Global Radio, potentially valuing the firm at around £313 million.
It said Heart and Galaxy owner Global Radio had made an indicative proposal at 190p a share - a 57 per cent premium to GCap's closing share price on Friday.
GCap said the proposed offer "significantly under-valued the company".
Reports over the weekend suggested that Global had proposed an offer at 180p a share, but that GCap was keen to give newly appointed chief executive Fru Hazlitt a chance to increase the value of the firm.
GCap, which also counts Classic FM in its stable, saw its shares jump significantly yesterday following the bid interest. Global Radio, which is chaired by former ITV boss Charles Allen, said it was "considering its position" in light of the rejection, although it is thought the firm may press ahead with the takeover plan.
GCap's move to reject the proposal without informing shareholders is likely to raise eyebrows, given that an offer at 190p a share would value the firm at around £110 million more than its current stock market valuation.
GCap has seen its share price more than halve since last summer after it revealed that annual profits had plummeted by 35 per cent.
But in November the firm offered encouraging signs that it was seeing a turnaround, with interim revenues up by 4.5 per cent at £100 million and only a marginal dip in pre-tax profits to £5.6 million, down from £5.8 million the previous year.
Last month the company also hired Fru Hazlitt after the departure of Ralph Bernard, who headed the group for 25 years and was the man behind its formation through the merger of Capital Radio and GWR.
It is thought that GCap chairman Richard Eyre is hoping Ms Hazlitt can boost the firm's share price back up to its former heights.
However, there are doubts over GCap's outlook given the pressures on advertising revenues in the sector.
Global Radio - backed by Irish racing tycoons John Magnier and JP McManus - has plans to become a powerful force in commercial radio in the UK after snapping up Chrysalis Group's radio stations last year in a £170 million deal.
The company was created specifically as an investment vehicle to buy the radio stations and plans to use Chrysalis Radio as a platform for further expansion in the sector.
It is reported that even if GCap successfully defends itself against Global, the approach could spark a bidding war for the company.
The bid by Global was made last month around the time it lost out in the bidding for the radio assets sold by Emap.
Global had been in the running with a bid of around £400 million, but was beaten in the auction for the company's radio assets by German publisher Bauer.
Analysts speculated at the time that Global might turn its attention to a company such as GCap.
As both own stations in Birmingham and London the deal would mean significant synergies and cost saving opportunities.
Broker Numis Securities said: "We would not underestimate the challenges of turning around GCap on a stand-alone basis.
"Moreover, we believe a cash bid in an uncertain advertising environment for a business facing structural challenges has considerable merit."
GCap was formed from the merger of Capital Radio and GWR in 2005, creating the UK's leading commercial radio group, representing around 30 per cent of the total commercial radio industry.