SiriusXM just announced they will be investing $480M in cash into Pandora, which will give them a ~16% stake in the company on an as-converted basis.
The investment will come in the form of newly-issued Series A convertible preferred Pandora stock. $172.5M of the preferred stock was purchased upon execution of the deal, and the balance will be bought at a second closing.
Separately, EventBrite just announced they have entered into an agreement with Pandora to purchase Ticketfly for $200M. Pandora purchased Ticketfly in 2015 for $450M with the goal of monetizing Pandora’s listeners by selling them tickets to live events.
EventBrite and Pandora will also enter into an agreement to help sell tickets through Pandora, something the company has already started working on with their original Ticketfly integration, but hadn’t been as successful as they originally hoped.
Yesterday, we reported that Pandora and KKR, a private equity firm that had previously agreed to buy $150M in Pandora Series A Preferred Shares had extended that agreement to allow it more time to close. However, there were also rumors that SiriusXM would step in as a strategic investor to acquire a “substantial minority investment in the company”.
This preferred stock will bear a 6% cumulative cash dividend for SiriusXM – which makes the deal particularly sweet. The preferred stock can also be converted into common stock at a price of $10.50 per share, which is a 14.2 percent premium to Pandora’s average stock price over the past 20-days. This
As part of the deal SiriusXM will get three seats on Pandora’s (now nine person) Board of Directors, with one of those acting as Chairman.
SiriusXM had been previously negotiating with Pandora to acquire the entire company, but those talks stalled to disagreements over price. This investment should still give Pandora the strategic help that only a major radio player like SIriusXM can provide, while still giving SiriusXM a large enough financial stake to make it worth their while.
And of course if they ever decide they want to revisit acquiring Pandora in the future, they will already own a sizable chunk of the company.
Today’s deal means that KKR will no longer be taking a stake in Pandora, and Pandora will subsequently pay KKR a $22.5M termination fee, which is common practice when a deal falls through at such a late stage.