Sirius XM will buy music streamer Pandora Media Inc for $3.5 billion, as it seeks to build scale to battle heavyweight streaming rivals Spotify, Apple Music and even traditional radio.
Sirius XM, controlled by media mogul John Malone’s Liberty Media Corp, has built a name supplying more than 175 channels to satellite radio owners, many of which are inside of a car. The company has largely trailed Pandora and Spotify Technology SA in mobile and streaming content.
Shares in Pandora, which has posted losses for at least the past eight quarters, initially soared 18.4 percent to $10.75 in premarket trading, topping an offer value of $10.05 based on Sirius’ Friday closing price.
Sirius shares, however, fell 5 percent to $6.63 as investors worried the company had overpaid.
The deal, worth $2.68 billion at that offer price, is expected to generate more than $7 billion in expected pro-forma revenue in 2018. Analysts said the two businesses were largely complementary.
Pandora shareholders will receive a fixed exchange ratio of 1.44 newly-issued SiriusXM shares for each share they hold.
The transaction is expected to close in the first quarter of 2019.