Satellite radio company SiriusXM plans to acquire music streaming service Pandora in a $3.5 billion all-stock deal unveiled Monday.
The agreement includes a “go-shop” provision where Pandora “may actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals following the execution date of the definitive agreement.”
Acquiring Pandora would make SiriusXM the world’s largest audio entertainment company, with over $7 billion in combined revenue expected in 2018. The deal would bring together SiriusXM’s 36 million subscribers in North America and Pandora’s more than 70 million monthly active users.
Jim Meyer, Chief Executive Officer of SiriusXM, said: “We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience, and have been impressed by Pandora’s strategic progress and stronger execution.
“We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses.
“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.”
Roger Lynch, Chief Executive Officer of Pandora, said: “We’ve made tremendous progress in our efforts to lead in digital audio.
“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.
“The powerful combination of SiriusXM’s content, position in the car, and premium subscription products, along with the biggest audio streaming service in the U.S., will create the world’s largest audio entertainment company.
“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.”
Pandora shares rose 2.4 percent to $9.32 a share in trading, after rising more than 10 percent in premarket trading, while Sirius stock fell 7.7 percent to $6.44 a share.
Shareholders will receive 1.44 of newly issued SiriusXM shares for each Pandora share they hold, the companies said. The implied Pandora price from this deal is $10.14 a share, or a 13.8 percent premium over a 30-day volume-weighted average price.
SiriusXM expects the deal to close in the first quarter of 2019.
