It has been confirmed today that a Pandora acquisition is underway. Finally, the search for a buyer is over.
Satellite radio SiriusXM (NASDAQ:SIRI) is to acquire the company in a deal estimated to be worth $3.5 billion. The company previously invested $480 million in the music streaming service and will now buy it outright.
Acquiring all the stocks of the music-streaming service will now make SiriusXM the largest audio entertainment company in the world.
Pandora Acquisition: SiriusXM to Take Over
SiriusXM already has 36 million subscribers in North America. Pandora (NYSE:P) has over 70 million monthly active users. The deal would combine both of these figures, giving SiriusXM a user-base over 100 million strong.
The Pandora acquisition would also give SiriusXM a combined revenue of over $7 billion in 2018.
“The combination creates the world’s largest audio entertainment company, with more than $7 billion in expected pro-forma revenue in 2018,” said SiriusXM in its blog post.
The agreement will see shareholders receive 1.44 of newly issued SiriusXM shares for each Pandora share they hold. It also includes a “go-shop” provision. This allows Pandora to “actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals following the execution date of the definitive agreement.”
Upon the news, Pandora shares rose while Sirius stock fell. This could imply that investors don’t see the positives in the Pandora acquisition.
Pandora rose 8.3% to $9.85; Sirius stock fell 5% to $6.63 a share.
Despite a highly competitive business, Pandora shares soared nearly 90% this year. Music streaming is a hefty business with giants such as Spotify, Amazon, and Apple all vying for consumers’ ears. Despite such competition, Pandora reported greater-than-expected earnings in its second quarter and announced a premium subscriber list of 6 million.