SiriusXM purchases Pandora for $3.5 billion

Irving Hamilton
September 24, 2018

It's not clear at what price Soros' firm made its Pandora investment, but even at the highest price of the quarter - $7.64 per share - Monday's deal price represents at least a 32% premium, making his stake potentially worth $72.2 million in new shares. SiriusXM and Pandora have competed for business.

Pandora, one of the oldest names in the music streaming market, is being purchased by SiriusXM for $3.5 billion in stock.

Broadcast radio, which has been feeling the same pressure from streaming, will now also have to fend off the combined strength of SiriusXM and Pandora.

The transaction builds on SiriusXM's position in subscription radio and as a curator of exclusive audio programming with one of the largest USA audio streaming platforms, enabling SiriusXM to expand its presence beyond vehicles into the home and other mobile areas. The company believes it can create "cross-promotion opportunities" through the acquisition and build "unique audio packages" that can work across both services. Its combined revenue with Pandora will go up to $7 billion and the userbase will be at almost 100 million (36 million SiriusXM subscribers and over 70 million monthly Pandora users).

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Sirius XM, controlled by media mogul John Malone's Liberty Media Corp, has built a name supplying more than 175 channels to vehicle drivers, but has largely trailed Pandora and Spotify Technology SA in mobile and streaming content. "Together, we will deliver even more of the best content on radio to our passionate and loyal listeners, and attract new listeners, across our two platforms", Jim Meyer said. But it also appeared to leave open the possibility of a shift, saying there would be "no immediate change in listener offerings". Together with SiriusXM, we're even better positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings.

Pandora shareholders will get a fixed-exchange ratio of 1.44 newly-issued Sirius XM shares for each share held. Six million users pay for Pandora's premium services, according to the company's most recent earnings report.

Monday's deal gives the pair a market value of about $34 billion, topping Spotify's $31.2 billion and follows through on Sirius' purchase of a 15 percent preferred-stock stake in Pandora for $480 million a year ago. "This transaction will deliver significant value to our stockholders and will allow them to participate in upside, given SiriusXM's strong brand, financial resources and track record delivering results".

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