SiriusXM and Pandora today announced an agreement under which SiriusXM will make a $480 million strategic cash investment in Pandora.
CNBC is reporting the partnership came together after a Sirius offer to buy the full company was rejected by Pandora, sources told CNBC. The chairman role for Pandora is likely to be filled by Sirius CEO Jim Meyer or Liberty Media CEO Greg Maffei after the investment agreement closes, the sources said.
The Series A preferred stock is convertible into common stock at a purchase price of $10.50 per share. The conversion price of the Series A preferred stock is approximately a 14.2% premium to Pandora's volume weighted average price for the 20-day period preceding June 9, 2017. The Series A preferred stock will bear a 6% cumulative dividend, payable in cash, accretion of the Series A preferred stock or a combination thereof.
Through this agreement, SiriusXM is making a strategic investment in the leading U.S. provider of ad-supported digital radio. With a loyal quarterly audience of nearly 100 million listeners in the U.S., Pandora is by far the leading player in the burgeoning digital audio advertising market. The capital provided through the SiriusXM investment will allow Pandora to make targeted investments and capitalize on opportunities to build on its position in the streaming radio business.
"Liberty Media (LMDIA) has long recognized the strength of the Pandora brand and the opportunities in the ad-supported digital radio market," said Greg Maffei, Chairman of the SiriusXM Board of Directors and Chief Executive Officer of Liberty Media Corporation (FWONK). "We are very supportive of SiriusXM's strategic investment."
"Pandora's Board and management team are committed to driving stockholder value and have carefully evaluated alternative strategies as part of the process disclosed on May 8," said Tim Leiweke, member of Pandora's Board of Directors. "We are pleased that the conclusion of that process resulted in a major investment by SiriusXM. With this investment, we have the backing of one of the media industry's most successful investors and significant capital to accelerate growth. Pandora is now poised to advance to the next stage of the company's lifecycle. Lastly, this transaction ensures that Pandora stockholders get the benefit of additional capital from an important strategic investor who can help enhance stockholder value."
"The investment from SiriusXM infuses resources to help Pandora continue to grow and innovate," said Pandora CEO and founder Tim Westergren. "With the strategic review behind us, and a strong balance sheet, we look forward to focusing on business execution and the optimization of our strategy."