Digital music service Pandora said it has received a USD 480 million cash investment from SiriusXM and sold its Ticketfly operation to Eventbrite for USD 200 million. The transactions come after the company announced in May that it was evaluating its strategic possibilities for the future. Pandora said the deals will give it a strong balance sheet, sharpen its operational focus, and strengthen its board of directors. Going forward, the company intends to make targeted investments and build up its position in the streaming radio business.
Under the deal, SiriusXM will name three people to Pandora’s board, bringing the total to nine. One of the peoople will serve as chairman.
Pandora will also cancel its previously announced USD 150 million cash injection deal from investor KKR, paying a termination fee of USD 22.5 million.
With the cash injection, SiriusXM will buy USD 480 million worth of newly issued Series A shares in Pandora, including USD 172.5 million upon execution of the agreement and the balance at a second closing. This is expected to happen by the fourth quarter. The Series A shares will represent a stake of 19 percent in Pandora, or 16 percent on an as-converted basis. The shares will be convertible at USD 10.50 per share, a 14.2 percent premium to Pandora's average price for the 20-day period before the deal was announced on 9 June, and bear a 6 percent cumulative dividend.
The USD 200 million from Eventbrite includes USD 150 million in cash and USD 50 million in notes payable to Pandora. Under the terms of the deal, the two companies expected to cut a deal that will allow Pandora to substantially broaden the scale of its ticketing opportunities. The music service believes the agreement is the “best approach” to ticketing, leveraging audience scale and targeting while minimizing operational commitment. The sale of Ticketfly is expected to close in the third quarter.
With these announcements, Pandora reiterated the financial guidance it provided when it released first quarter results. The company sees second quarter revenues at USD 360-375 million and an adjusted EBITDA loss of USD 65-50 million. Pandora also confirmed its full year expectations of revenues at USD 1.50-1.65 billion, minus any adjustment for the sale of Ticketfly.
Pandora has a US listening audience of nearly 100 million.
