Pursuant to the new agreement, the owners of the outstanding shares in Pandora that SiriusXM does not now own will receive a fixed exchange ratio of 1.44 newly issued SiriusXM shares for each share of Pandora they hold. Sirius acquired a stake in Pandora previous year for $480 million, giving the online-radio company a lifeline after upstarts such as Spotify Technology SA began luring away streaming-music subscribers. Over 70 million Pandora monthly active users make up the "largest digital audio audience in the US", although monetizing this subscriber base has proven tricky when a measly 6 million people or so are actually paying for the service.
The companies say users shouldn't expect any immediate changes, Pandora will continue to operate as a separate service. In other words, Pandora will have a chance to look for better offers than what SiriusXM is providing and act on one should it become available. Instead of trying to push satellite radio for home and mobile use, Pandora will be a much more attractive option to consumers and helps diversify revenue streams.
Supporting and strengthening Pandora's brand.
In a statement, Meyer said, "We believe there are significant opportunities to create value for both companies' stockholders by combining our complementary businesses". Cross-promotion for artists is also on the docket.
"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 vehicle even further". "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.
Both companies' boards have approved the transaction, which is expected to close in 2019's first quarter.
SiriusXM stock was slightly lower in premarket trading following the announcement.