Sirius to Acquire Pandora Media in $3.5 Billion All-Stock Deal

Satellite radio giant SiriusXM is acquiring online music service Pandora Media in a $3.5 billion all-stock deal. The deal should help John Malone’s SiriusXM reach beyond its current audience that most commonly listens while driving, and better compete with Spotify. The satellite radio operator paid $480 million last year for a 19 percent stake in Pandora when it started losing subscribers to streaming services. Billionaire Malone has been expanding his radio empire; in addition to the Pandora deal, his Liberty Media has expressed interest in iHeartMedia.

According to The Verge, “The satellite radio company says it intends to maintain the Pandora service and brand, along with its roughly 70 million monthly active users (5.6 million of which are paying members), which stands at double that of SiriusXM’s existing 36 million subscribers.”

“There’s real money to be made by optimizing cross promotion across these platforms,” said SiriusXM chief exec Jim Meyer. “That’s, if you want to know, what my gut tells me, that’s where I see the biggest opportunity.”

“The all-stock deal values Pandora at $10.14 a share,” reports Bloomberg. “It’s 12 percent more than the closing price on Friday, but way below levels of four years ago, before the stock tanked as competition from Spotify and Apple Music intensified.”

Pandora has experienced years of losses, but its stock began to recover after the service launched new listening options and hired former Sling TV CEO Roger Lynch.

“SiriusXM and Pandora said the transaction is expected to be completed in the first quarter of next year,” notes Bloomberg. “The deal allows Pandora to look around for better offers. If Pandora takes a superior proposal from another acquirer, the company would owe Sirius a $52.5 million breakup fee. If the deal fails for other reasons, the break-up fee is $105 million.”