Pandora acquired by SiriusXM in $3.5bn deal

Lloyd Doyle
September 24, 2018

This morning Sirius XM and Pandora today announced an agreement under which SiriusXM will acquire Pandora in an all-stock transaction valued at approximately $3.5 billion. Over 70 million Pandora monthly active users make up the "largest digital audio audience in the US", although monetizing this subscriber base has proven tricky when a measly 6 million people or so are actually paying for the service.

The transaction builds on SiriusXM's position in subscription radio and as a curator of exclusive audio programming with one of the largest U.S. audio streaming platforms, enabling SiriusXM to expand its presence beyond vehicles into the home and other mobile areas.

The proposed deal is expected to close in the first quarter of next year, Pandora said, and must first win the approval of Pandora stockholders. SiriusXM now owns convertible preferred stock in Pandora that represents a stake of approximately 15% on an as-converted basis.

"We believe there are significant opportunities to create value for both companies' stockholders by combining our complementary businesses", Jim Meyer, Sirius XM's CEO, said in a press release.

Sirius XM's chief executive said in a statement that the acquisition would boost the company's efforts to reach more listeners beyond auto drivers. In other words, Pandora will have a chance to look for better offers than what SiriusXM is providing and act on one should it become available. Pandora has introduced its own on-demand music service and brought in former Sling TV Chief Executive Officer Roger Lynch a year ago to work on a turnaround. Based on the 30-day volume-weighted average price of $7.04 per share of SiriusXM common stock, the implied price of Pandora common stock is $10.14 per share, representing a premium of 13.8% over a 30-day volume-weighted average price.

Following the completion of the transaction, there will be no immediate change in listener offerings.

Sirius XM would give Pandora shareholders 1.44 new shares for every Pandora share they own.

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