SiriusXM working to buy music streamer Pandora for $3.5 billion

Posted at 9:56 AM, Sep 24, 2018
and last updated 2018-09-24 11:56:08-04

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.

Monday’s deal gives the pair a market value of about $34 billion, topping Spotify’s $31.2 billion and follows through on Sirius’ purchase of a 15 percent preferred-stock stake in Pandora for $480 million last year.

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.