SiriusXM is Buying Pandora

01 SiriusXM FILE

Sirius XM, the satellite radio company controlled by John Malone's Liberty Media, is buying Pandora Media in a $3.5 billion aimed at creating a larger rival to Apple Music and Spotify in the intensifying streaming music battle.

For every share of Pandora they own, shareholders will get 1.44 of newly issued shares of Sirius XM, the companies said in their announcement Monday.

The deal was structured by a subsidiary of SiriusXM purchasing an aggregate of $480 million in Series A convertible preferred stock, representing a stake of approximately 15% on an as-converted basis. Its combined revenue with Pandora will go up to $7 billion and the userbase will be at almost 100 million (36 million SiriusXM subscribers and over 70 million monthly Pandora users).

Following the completion of the transaction, there will be no immediate change in listener offerings, according to both companies.

The Pandora purchase will help SiriusXM provide signifcant ad inventory to marketers that are turning to automation for digital audio advertising.

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Broadcast radio, which has been feeling the same pressure from streaming, will now also have to fend off the combined strength of SiriusXM and Pandora.

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. "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", Jim Meyer said.

The all-stock transaction values Pandora at US$10.14 a share, about 12 per cent more than the company's closing price on Friday. The company believes it can create "cross-promotion opportunities" through the acquisition and build "unique audio packages" that can work across both services.

Pandora shares rose 9.5 percent to $9.95 in early US trading.

SiriusXM hopes to close the deal in the first quarter of 2019. Pandora also has a "go-shop" period in which it can solicit other offers from third parties.

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