After weeks of speculation, SiriusXM has made a $480 million strategic cash investment in digital streaming platform Pandora. Under the agreement, a subsidiary of SiriusXM will purchase an aggregate of $480 million in newly issued Series A convertible preferred stock of Pandora, which represents 19% of Pandora’s currently outstanding common stock and a 16% stake on an as-converted basis. 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.
Jim Meyer, CEO of SiriusXM, said, “This strategic investment in Pandora represents a unique opportunity for SiriusXM to create value for its stockholders by investing in the leader in the ad-supported digital radio business, a space where SiriusXM does not play today. Pandora’s large user base and its ability to provide listeners with a personalized music experience are tremendous assets. With its strong technology and new product offerings, we believe there are exciting opportunities for Pandora to accelerate its growth and increase value for Pandora and SiriusXM stockholders.” Greg Maffei, Chairman of the SiriusXM Board of Directors and CEO of Liberty Media commented, “Liberty Media has long recognized the strength of the Pandora brand and the opportunities in the ad-supported digital radio market. We are very supportive of SiriusXM’s strategic investment.” Pandora CEO and Founder Tim Westergren added, “The investment from SiriusXM infuses resources to help Pandora continue to grow and innovate. 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.”
Pandora has also announced its sale of Ticketfly to Eventbrite for $200 million. Ticketfly was acquired by Pandora in October 2015 in a deal that was originally valued at $450 million but later reduced to $335 million. At the time of the 2015 acquisition, many in the live entertainment industry thought Pandora over paid for the online ticket distributor.
Also in connection with the transaction, Pandora agreed with an affiliate of Kohlberg Kravis & Roberts to terminate their Investment Agreement announced on May 8, 2017 and pay KKR a termination fee of $22.5 million.