SiriusXM buys Pandora to step up streaming music wars

Actor Matthew McConaughey is interviewed at SiriusXM’s Town Hall in September 2018. - AFP Photo

The all-stock deal creates "the world’s largest audio entertainment company," with some $7 billion in revenues, according to a statement from the two firms. SiriusXM, the leader in subscription radio in the US serving mainly motorists with music and news channels, sees the acquisition as an opportunity "to significantly expand its presence beyond vehicles into the home and other mobile areas," it said.

The move could create a strong competitor to streaming music leaders Spotify and Apple.

"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," said SiriusXM chief executive Jim Meyer.

"We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses."

The merger agreement includes a "go-shop" provision allowing Pandora to seek a better offer from another party.

The companies said they expect to close the deal in early 2019 and that there would be no immediate change in listener offerings.

Roger Lynch, CEO of Pandora, said the combined firm would be "better positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings."

Analyst Mark Mahaney of RBC Capital Markets said the tieup appeared to be a positive move that could help Pandora compete in streaming.

"We view this as a logical strategic step for Pandora," Mahaney said in a note to clients.

"Synergies between its very strong in-home US presence and SiriusXM’s very strong in-car presence should be generatable over time."