New York-based subscription radio company SiriusXM is acquiring a music streaming service called Pandora Media. The deal has been valued at about $3.5 billion that will enable the company to expand its services beyond cars and into mobile devices and homes.
The company claimed that this acquisition will create the world’s largest audio entertainment company. The all-stock deal will build an audio-entertainment firm with a market valuation of $30 billion.
The company has 36 million subscribers in North America and was formed with the merger of the Sirius and XM satellite radio services in 2008. The ability to provide a subscription service that gives Pandora customers access to streaming music and satellite radio would help set it apart from its rivals and would likely bring in fresh customers.
“We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses,” SiriusXM CEO Jim Meyer stated.
SiriusXM’s relationships with automobile companies will open the door for Pandora to have better distribution in that market. On the other hand, the deal will help SiriusXM enter into and make use of Pandora’s mobile strength meanwhile giving it the chance to improve in areas such as making personalized listening recommendations.
Founded in 2000, Pandora has more than 70 million active users. It faces intense competition from Spotify. Soon after that investment was announced, Pandora co-founder Tim Westergren lost his positions as CEO and board member, and Michael Herring lost his job as president.
The deal is expected to close in Q1 2019, however, it still needs approval from Pandora shareholders. If the deal is terminated, Pandora will have to pay either $52.5 million or $105 million, depending on the circumstances.