SiriusXM is buying Pandora, and that’s a huge deal

Gladys Abbott
September 25, 2018

The satellite radio company on Monday announced plans to acquire streaming music company Pandora for $3.5 billion. 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). Since anticipation of a SiriusXM purchase started bubbling up, Pandora stock doubled in price.

With that in mind, we can probably expect SiriusXM to begin offering monthly subscription packages that include both radio and music streaming through Pandora.

Following the completion of the deal, SiriusXM will become the world's largest provider of audio entertainment.

Meanwhile, the deal will help SiriusXM tap into Pandora's mobile strength while giving it the chance to improve in areas such as making personalized listening recommendations.

SiriusXM couldn't possibly forget to mention its "extensive automotive relationships" as a way to beef up Pandora's presence on smartphones, computers, and cars nationwide.

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"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".

The acquisition creates the "largest audio entertainment company", according to a press release, as Pandora's 70 million mostly active users join SiriusXM's 36 million paid subscribers.

Sirius XM said following the deal, which is expected to close in the first quarter of 2019, Pandora stockholders will own 8.6 percent of the pro forma company on a fully diluted basis. "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.

Pandora shares have risen 2% on the deal news to $9.29, but Sirius investors appear to be anxious about the steep price of the deal, sending Sirius shares down more than 8% to about $6.40.

Pandora also has a "go-shop" period in which it can solicit other offers from third parties.

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