SiriusXM to Acquire Pandora in All-Stock Transaction Valuing Pandora at $3.5 Billion
SiriusXM and Pandora are set to merge, creating the world’s largest entertainment company. The two companies have announced a definitive agreement under which SiriusXM will acquire Pandora in an all-stock transaction valued at approximately $3.5 billion. The companies are expected to rake in more than $7 billion in expected pro-forma revenue in 2018 and strong, long-term growth opportunities.
This strategic transaction builds on SiriusXM’s position as the leader in subscription radio and a critically-acclaimed curator of exclusive audio programming with the addition of the largest U.S. audio streaming platform. Pandora’s powerful music platform will enable SiriusXM to significantly expand its presence beyond vehicles into the home and other mobile areas. Following the completion of the transaction, there will be no immediate change in listener offerings.
The acquisition will give both companies the opportunity to capitalize on cross-promotion opportunities between SiriusXM’s base of more than 36 million subscribers across North America and 23 million-plus annual trial listeners and Pandora’s more than 70 million monthly active users, which represents the largest digital audio audience in the U.S. They’ll be able to leverage SiriusXM’s exclusive content and programming with Pandora’s ad-supported and subscription tiers to create unique audio packages, while also utilizing SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution. Continuing investments in content, technology, innovation and monetization opportunities will be expanded through both ad-supported and subscription services in and out of the vehicle. The two will supporting and strengthen Pandora’s highly relevant brand and will create a promotional platform for emerging and established artists, curated and personalized in ways to deliver the most compelling audio experience that connects artists to their fan bases, as well as new listeners.
“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,” states Jim Meyer, Chief Executive Officer of SiriusXM. “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.”
“We’ve made tremendous progress in our efforts to lead in digital audio,” states Roger Lynch, Chief Executive Officer of Pandora. “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.”
The transaction has been unanimously approved by both the independent directors of Pandora and by the board of directors of SiriusXM. The transaction is expected to close in the first quarter of 2019. It is subject to approval by Pandora stockholders, expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and certain competition laws of foreign jurisdictions and other customary closing conditions.
SiriusXM reiterated its full-year 2018 guidance provided on July 25, 2018, with self-pay net subscriber additions of approximately 1.15 million; revenue over $5.7 billion; adjusted EBITDA of approximately $2.175 billion, and free cash flow of approximately $1.5 billion.
Pandora reiterated its third quarter 2018 guidance provided on July 31, 2018, with revenue of $390 million to $405 million and Adjusted EBITDA of ($25) million to ($10) million.