Nielsen made a surprising announcement this morning, as the media measurement giant announced it has signed a definitive agreement to acquire radio ratings mainstay Arbitron. Nielsen has agreed to acquire all of the outstanding common stock of Arbitron for $48/share in cash, representing a premium of approximately 26 percent to Arbitron’s closing price on December 17, 2012. Nielsen has a financing commitment for the total transaction amount. The transaction has been approved by the boards of both companies and is subject to customary closing conditions, including regulatory review.

"U.S. consumers spend almost 2 hours a day with radio. It is and will continue to be a vibrant and important advertising medium," said Nielsen CEO David Calhoun. "Arbitron will help Nielsen better solve for unmeasured areas of media consumption, including streaming audio and out-of-home. The high level of engagement with radio and TV among rapidly growing multicultural audiences makes this central to Nielsen’s priorities.”

With the addition of Arbitron's assets, Nielsen intends to further expand its 'Watch' segment’s audience measurement across screens and forms of listening. "These integrated, innovative capabilities will enable broader measurement of consumer media behavior in more markets around the world," said Steve Hasker, Nielsen President of Global Media Products and Advertiser Solutions. "We will also bring local clients greater visibility to empower more precise advertising placement and campaign effectiveness."

"Radio reaches more than 92 percent of all American teens and adults because they love to listen to music, talk, news and information while at home, at work and in their cars," said William T. Kerr, President/CEO of Arbitron. "By combining Nielsen’s global capabilities and scale with Arbitron’s unique radio measurement and listening information, advertisers and media clients will have better insights into consumer behavior and the return on marketing investments."

In the announcement of the deal, Nielsen says that "the combined assets will support Nielsen's strong cash flow characteristics and will enable continued investment in growth initiatives. Excluding estimated transaction costs and purchase accounting adjustments, the acquisition is expected to be approximately $0.13 accretive to adjusted EPS 12 months after the close and approximately $0.19 accretive to adjusted EPS 24 months after the close. Cost synergies associated with the acquisition are expected to be at least $20 million and will be largely driven by the integration of technology platforms and data acquisition efforts."