Music app maker Pandora stands to gain almost $700 million from separate deals involving a strategic investment and an agreement to sell its ticket distribution service.
The app maker is set to receive an investment of $480 million from satellite radio company SiriusXM, with a further $200 million to come from the agreement to sell Ticketfly to Eventbrite.
In a statement, Pandora said the transactions: “arm the company with a strong balance sheet, sharpen operational focus, and strengthen the company’s board of directors.”
Pandora will leverage SiriusXM’s “position in the streaming radio business” and make “targeted investments”. However, the company reportedly rejected a SiriusXM advance involving a full take over.
Instead, SiriusXM’s investment will buy it 19 per cent of Pandora’s stock and three seats on the board, including the chairmanship. The satellite radio company will not be able to buy more shares for 18 months or acquire more than 31.5 percent of the company without the Pandora board’s approval.
Pandora CEO and founder Tim Westergren: “After years of innovation and hard work we now have critical pieces in place: a massive and highly engaged audience, a market-leading digital advertising business, a best-in-class product portfolio, and a robust balance sheet that gives us the flexibility we need to attack what is becoming a larger and larger opportunity as digital music enters a new golden age.”
For SiriusXM, the deal offers access to Pandora’s “loyal quarterly audience of nearly 100 million listeners” in the US, the company stated. Sirius XM is controlled by Liberty Media and claims to be the world’s largest radio company measured by revenue, with around 31.6 million subscribers.
The agreement is subject to customary closing conditions, including antitrust approval, and is expected to close by Q4. The agreement may be terminated by either party if it is not closed by February 1, 2018.
A previous agreement with private equity company KKR covering a $150 million investment, which was agreed in May, will be terminated at a cost of $22.5 million.
Pandora faces stiff competition from services including Spotify, Apple Music and Amazon Music Unlimited.
Indeed, while Pandora revealed its total subscribers hit 4.7 million in Q1 2017, up from 3.9 million in the same quarter of 2016, the number of active listeners fell from 79.4 million to 76.7 million in the recent period.
Meanwhile Spotify, most recently valued at $13 billion, could reportedly be the first major company to carry out a direct listing on the New York Stock Exchange, with plans to go public later this year or early 2018.