Scottish Radio Holdings (SRH) is no longer pursuing Galway Bay FM because the radio station has been valued at €16-€18 million.

SRH, which purchased FM 104 earlier this year for more than €30 million, is understood to have baulked at the valuation put on the station during recent discussions.

With SRH no longer pursuing the station, UTV has emerged as the clear front-runner to purchase the station, although it has declined to comment on its intentions. Nobody from the company handling the sale process, Connolly Corporate Finance, was available for comment yesterday.

It is understood that SRH was prepared to pay €12-€13 million for the station. The shareholders of Galway Bay regarded this as too low.

Galway Bay is regarded as one of the more attractive radio assets in the market because of the demographic trends in the area. However, the large number of shareholders on the company's register could make getting agreement difficult.

According to records lodged with the Companies Office, Galway Bay posted €1.3 million in retained profits for the year ended December.

Mr Richard Findlay, SRH chief executive, remains interested in acquiring Irish assets for the company, but recent suggestions that Emap might take over SRH have complicated the picture.

While UTV is also in a position to buy Galway Bay, there is the outside possibility it might not be sold at all. Some shareholders of Western Community Broadcasting, the group of local businesspeople which owns Galway Bay FM, have suggested buying Shannonside FM, which operates in Roscommon and Leitrim and is up for sale, as an alternative.

Some shareholders believe Shannonside would be a perfect fit for Galway Bay, giving the combined entity substantial clout with national and western advertisers.