SiriusXM will acquire music streaming service Pandora in an all-stock transaction valued at $3.5 billion U.S.
The subscription satellite radio service says its acquisition of the music platform will create the world’s largest audio entertainment company, with more than $7 billion in expected pro-forma revenue in 2018 and strong, long-term growth opportunities.
SiriusXM says acquiring the platform will also allow it to expand its presence beyond vehicles into the home and other mobile areas. There will be no immediate change in listener offerings following completion of the transaction which is expected in the first quarter of 2019.
“We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses,” Jim Meyer, CEO of SiriusXM, said in a press release. “The addition of Pandora diversifies SiriusXM’s revenue streams with the U.S.’s largest ad-supported audio offering, broadens our technical capabilities, and represents an exciting next step in our efforts to expand our reach out of the car even further. Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists, and the broader content communities. 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.”
SiriusXM says 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, representing the largest digital audio audience in the U.S.
It also plans to leverage SiriusXM’s exclusive content with Pandora’s ad-supported and subscription tiers to create unique audio packages, and use SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution.
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 per cent 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 per cent on an as-converted basis.
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