SiriusXM Acquires Pandora For $3.5B and Why It Matters

Pandora acquired by SiriusXM in $3.5bn deal

New York-based SiriusXM Holdings Inc. has more than 36-million subscribers in North America, while Pandora has more than 70-million monthly active users.

SiriusXM has been interested in Pandora for more than a year.

Following the announcement of the deal, Pandora stocks saw an 8.3% increase while Sirius fell by 5%.

We'll have to see how Pandora plans on competing with the major streaming services such as Apple Music and Spotify. SiriusXM's stock tumbled 7.5 percent.

Many previously speculated that SiriusXM would completely acquire Pandora streaming service.

"We believe there are significant opportunities to create value for both companies' stockholders by combining our complementary businesses".

SiriusXM's relationships with automobile companies will open the door for Pandora to have better distribution in that market.

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Supporting and strengthening Pandora's brand.

"SIRI can not offer on-demand radio, and can not offer customization, and Pandora offers both", said Michael Pachter, an analyst with Wedbush Securities in Los Angeles. "The addition of Pandora diversifies SiriusXM's revenue streams with the US'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 vehicle even further".

PANDORA CEO ROGER LYNCH said, "We've made tremendous progress in our efforts to lead in digital audio".

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. At the moment, SiriusXM can boast around 36 million satellite radio subscribers, but with 70 million monthly active users, Pandora has almost double that amount.

Sirius XM and Pandora said the transaction is expected to be completed in the first quarter of next year.

Every Pandora shareholder will receive 1.44 shares of newly issued SiriusXM stock, putting a 13.8% premium on the company's average price over the past 30 days.

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

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