SiriusXM today announced that it will acquire Pandora for $3.5 billion in an all-stock transaction, creating "the world's largest audio entertainment company," according to Pandora's press release on the news. The transaction has been unanimously approved by both the independent directors of Pandora and by the board of directors of SiriusXM, and is now expected to close in Q1 2019.
The companies explain that through the acquisition SiriusXM will use Pandora's platform to "significantly expand" its presence beyond vehicles, and into the user's home and smartphone devices. Still, it's promised that there will be no immediate change in listener offerings after the acquisition is completed.
Both CEOs of SiriusXM and Pandora commented on the announcement:
Jim Meyer, Chief Executive Officer of SiriusXM, said, "We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience, and have been impressed by Pandora's strategic progress and stronger execution. We believe there are significant opportunities to create value for both companies' stockholders by combining our complementary businesses. The addition of Pandora diversifies SiriusXM's revenue streams with the U.S.'s largest ad-supported audio offering, broadens our technical capabilities, and represents an exciting next step in our efforts to expand our reach out of the car even further. Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists, and the broader content communities. Together, we will deliver even more of the best content on radio to our passionate and loyal listeners, and attract new listeners, across our two platforms."
Roger Lynch, Chief Executive Officer of Pandora, said, "We've made tremendous progress in our efforts to lead in digital audio. Together with SiriusXM, we're even better positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings. The powerful combination of SiriusXM's content, position in the car, and premium subscription products, along with the biggest audio streaming service in the U.S., will create the world's largest audio entertainment company. This transaction will deliver significant value to our stockholders and will allow them to participate in upside, given SiriusXM's strong brand, financial resources and track record delivering results."
Likewise, Pandora is expected to get a boost to in-car audio using SiriusXM's relationships with the automotive industry. The companies are planning to release audio packages that combine the two services' offerings, including SiriusXM's radio stations and Pandora's ad-supported and new subscription tiers.
Specifically, SiriusXM ensures that it will "support and strengthen" Pandora's brand, and further enhance its existing Pandora Premium on-demand music streaming service. Pandora Premium will get new promotional campaigns for emerging and established artists, which will be personalized and targeted at relevant users based on their listening habits.
Pandora Premium was announced in late 2016 and then launched in the spring of 2017, allowing Pandora users to listen to music on-demand for the first time at a price of $9.99 per month. Similar to Apple Music and Spotify, Pandora Premium subscribers can create playlists, like/dislike tracks, browse personalized new music suggestions, and more.