SiriusXM to Acquire Music Streaming Company Pandora

Irving Hamilton
September 24, 2018

Hedge fund billionaire George Soros disclosed a massive stake in Pandora last month, and his bet on streaming music appears to have already begun to pay off.

Sirius XM Holdings Inc. said it will acquire Pandora Media a $3.5 billion deal, helping the satellite-radio company expand into online music. 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.

Even at the highest prices of the quarter, Sirius XM's purchase of Pandora would represent at least a 30% premium on his investment, so long as he still holds the stock.

Pandora shares are up more than 9% on the news, trading just below $10.

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But SiriusXM says "unique audio packages" are also in the pipeline, somehow combining the parent company's "exclusive content and programming" with the daughter's ad-supported and subscription tiers to, well, milk more money from more users. The company believes it can create "cross-promotion opportunities" through the acquisition and build "unique audio packages" that can work across both services. 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.

Sirius XM would give Pandora shareholders 1.44 new shares for every Pandora share they own. The powerful combination of SiriusXM's content, position in the vehicle, and premium subscription products, along with the biggest audio streaming service in the USA, will create the world's largest audio entertainment company.

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. "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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