Sirius XM Is Investing $480 Million in Pandora Media

Updated: Jun 09, 2017 10:15 AM ET

U.S. satellite radio company Sirius XM Holdings said on Friday it would would invest $480 million in Pandora Media after talks to buy the music streaming company ended over price disagreements.

A subsidiary of Sirius will buy issued series A convertible preferred stock of Pandora, representing 19% of the company's current outstanding shares, according to a joint statement.

A partnership between Sirius and Pandora would be a boon to both companies, given that they target a common audience. Pandora is seeking to become more popular with drivers, many of whom subscribe to Sirius, while Sirius is looking to expand its internet and mobile presence.

Sirius bought $172.5 million of the preferred shares upon execution of the deal, and the rest would be bought at a second closing, the companies said on Friday.

The investment from Sirius, a month after private equity firm KKR & Co agreed to invest $150 million in Pandora, would prevent Sirius from buying additional securities of Pandora for 18 months.

Sirius controlled by media mogul John Malone's Liberty Media also agreed not to buy more than 31.5% of Pandora, without the approval of its board on completion of the 18-month period.

Reuters reported early on Thursday that Sirius was looking to invest in Pandora, citing people familiar with the matter.

The latest investment by Sirius (siri) is convertible into common stock at $10.50 per share, a 23.8% premium to Pandora's Wednesday close, a day before Reuters reported about the investment.

Pandora also said the Sirius investment would end its agreement with KKR and it would pay a termination fee of $22.5 million.

KKR and Pandora had agreed to briefly extend closing of the investment on Thursday following a 30-day deadline KKR had given Pandora to look for an alternative deal.

Upon closing of the agreement, three people designated by Sirius will be named to Pandora's board and one of them would be named chairman, the companies said.

Pandora also said on Friday it would sell its ticketing firm Ticketfly to Eventbrite for $200 million. Ticketfly was bought by the internet music provider for $450 million last year to broaden its portfolio.

Shares of Pandora (p) were up 6.3% at $8.95 in morning trading on Friday, while Sirius's shares were marginally down at $5.35.

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