Sirius XM to Buy Pandora in $3.5 Billion Deal

SiriusXM will acquire Pandora for $3.5 billion to create world's largest audio entertainment company

SiriusXM will acquire Pandora for $3.5 billion to create world's largest audio entertainment company

Last year, SiriusXM agreed to make a $480 million strategic cash investment in Pandora.

SiriusXM on Monday morning announced that it plans to acquire Pandora in an all-stock transaction that values the company at $3.5 billion.

"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 auto even further".

Recently it has lost ground to rivals Spotify and Apple Music, and previous year it launched a Spotify-like premium on-demand service.

SiriusXM Holdings has more than 36 million subscribers in North America, while Pandora has more than 70 million monthly active users. It's not yet clear how or if the strategies of SiriusXM and Pandora will change in light of the acquisition, but Pandora CEO Roger Lynch said, "There's no shortage of ideas that [SiriusXM CEO Jim Meyer] and I have had on things we can do together, everything from the content side to things we can bundle in the vehicle". The company believes it can create "cross-promotion opportunities" through the acquisition and build "unique audio packages" that can work across both services. 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 auto even further. But it also appeared to leave open the possibility of a shift, saying there would be "no immediate change in listener offerings". "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".

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Lynch also said in the same statement: "We've made tremendous progress in our efforts to lead in digital audio".

The satellite radio company, which already owns about 15 percent of Pandora, said it would maintain both the Sirius XM and Pandora brands and services.

For Pandora, the music streaming company said the deal would fortify its advertising business, and boost its subscription offerings. Six million users pay for Pandora's premium services, according to the company's most recent earnings report.

For every share of Pandora they own, shareholders will get 1.44 of newly issued shares of Sirius XM, the companies said in their announcement Monday. "This transaction will deliver significant value to our stockholders and will allow them to participate in upside, given SiriusXM's strong brand, financial resources and track record delivering results".

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