Sirius XM and Pandora have announced the satellite music provider will acquire the streaming service in a $3.5 billion all-stock deal. ($10.14 per share.) Pandora will continue to operate as an independent service.
For Pandora shareholders, this offer represents a 13.8 percent premium over the volume-weighted average share price of the past 30 days. Both the Pandora board and the SiriusXM board have approved the plan.
While both sides have approved the deal, it includes a “go-shop” provision, which allows Pandora to listen to offers from other suitors, so the deal might not happen. If all goes well, the acquisition is expected to close in the first quarter of 2019.
The press release says Sirius XM and Pandora will engage in cross-platform promotion, so you’ll be hearing plenty of Pandora promos on your favorite Sirius XM channels, and you’ll be seeing and hearing Sirius XM promos while listening to Pandora.
The combined company will drive long-term growth by:
- Capitalizing on cross-promotion opportunities between SiriusXM’s base of more than 36 million subscribers across North America and 23 million-plus annual trial listeners and Pandora’s more than 70 million monthly active users, which represents the largest digital audio audience in the U.S.
- Leveraging SiriusXM’s exclusive content and programming with Pandora’s ad-supported and subscription tiers to create unique audio packages, while also utilizing SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution.
- Continuing investments in content, technology, innovation, and expanded monetization opportunities through both ad-supported and subscription services in and out of the vehicle.
- Supporting and strengthening Pandora’s highly relevant brand.
- Creating a promotional platform for emerging and established artists, curated and personalized in ways to deliver the most compelling audio experience that connects artists to their fan bases, as well as new listeners.
Pursuant to the agreement, the owners of the outstanding shares in Pandora that SiriusXM does not currently own will receive a fixed exchange ratio of 1.44 newly issued SiriusXM shares for each share of Pandora they hold. 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. The transaction is expected to be tax-free to Pandora stockholders. SiriusXM currently owns convertible preferred stock in Pandora that represents a stake of approximately 15% on an as-converted basis.