Jazz FM, which is quoted in London, is competing against what are believed to be several rivals to win control of London News Radio, which is owned by radio group GWR, Reuters, ITN and the Daily Mail & General Trust.
It was reported in December that media group Chrysalis was among the frontrunners to buy the group. Capital Radio and Scottish Radio Holdings are also reported to be interested.
The price tag of around £20m is considerably lower than the £30m that some analysts thought LNR might be sold for. Despite the tough market for radio at the moment, LBC has also become more valuable, as it is set to switch from AM to FM, giving it greater audience reach. The station will also be relaunched to mark this change.
News of the sale comes as LNR's shareholders seek to retrench their businesses in the face of a tough climate for media companies.
The Jazz FM bid is being backed by its two biggest investors: Clear Channel, the US poster advertising company; and the Guardian Media Group.
If Jazz FM wins with its bid, it will combine London News Radio's operations with its own London-based Jazz FM station, which will allow it to reduce costs substantially.
GWR Group owns 20% of LNR; ITN owns 42%; Reuters owns 32%; and the Daily Mail & General Trust, which also owns part of GWR, owns 2% of the company.
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