Focus Media, the US-listed Chinese advertising company, has formally agreed a $3.7bn offer from a group of private equity funds including Carlyle to take the company private.

Focus Media operates television advertising in office lobbies and large retail outlets across China. The deal, announced on Wednesday, is one of the biggest leveraged buyouts of a Chinese company. A banker close to the transaction said it involved the consortium taking on more than $1bn in debt.

The agreed price of $27.50 a share represents a 17.6 per cent premium over the company’s closing share price on August 10, the last trading day before Focus announced that it had received an offer to go private. The deal should be completed early in the second quarter of next year.