Satellite radio provider Sirius XM has agreed to buy streaming music group Pandora in an all-stock transaction worth USD 3.5 billion. Pandora said the deal will create the world's largest audio entertainment company, with more than USD 7 billion in expected pro-forma revenues for this year and strong, long-term growth opportunities. The transaction will help SiriusXM significantly expand its presence beyond vehicles and into the home and other mobile areas, while strengthening Pandora's position in the competitive online market.
XiriusXM had invested USD 480 million in Pandora in June 2017. The transaction meant it could name three people to Pandora’s board. Before the full takeover, its stake in Pandora had been at about 15 percent.
SiriusXM has 36 million subscribers across North America, plus over 23 million annual trial listeners; Pandora has more than 70 million monthly active users, claiming the largest digital audio audience in the US.
The acquisition is not expected to change listener offerings, brands, products or services for either SiriusXM or Pandora. However, SiriusXM does expect to create more audio packages, using its own content and programme and Pandora's ad-supported and subscription tiers. SiriusXM will also use its automotive relationships to drive Pandora's in-car distribution. Investment in content, technology and innovation will continue, with the goal of expanding monetisation opportunities through both ad-supported and subscription services in and out of the vehicle. In addition, SiriusXM will create a personalised promotional platform for emerging and established artists.
The acquisition has been unanimously approved by both the independent directors of Pandora and by the board of directors of SiriusXM. It is expected to close in the first quarter. It is subject to approval by Pandora stockholders and regulatory approvals.
Alongside the announcement, Pandora reiterated its guidance for the third quarter. The company expects revenues of USD 390-405 million and an adjusted EBITDA loss of USD 25-10 million. SiriusXM also reiterated its outlook, for the full year. The company sees self-pay net subscriber additions of about 1.15 million, revenues of over USD 5.7 billion, adjusted EBITDA at USD 2.175 billion, and free cash flow at USD 1.5 billion.
