Music app maker Pandora will receive a $150 million strategic investment from private equity company KKR to help the app business “compete aggressively in a rapidly changing, complex market” as it mulls a sale.
“Having secured a significant financial commitment from KKR to strengthen the company’s balance sheet, we have positioned the company to evaluate any potential strategic alternatives, including a sale, in the 30 days before the financing is set to close,” said James M P Feuille, a director on the board.
In December 2016, Pandora was approached about a takeover by Sirius XM Radio, and was also courting other potential suitors, Bloomberg reported.
News of the investment and potential sale comes as Pandora posted a net loss of $132.3 million in Q1 2017, compared with a loss of $115.1 million in the same quarter of 2016. Revenue of $316 million in the recent period was up 6 per cent year-over-year.
Pandora faces stiff competition from services such as 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 2016 quarter, the number of active listeners fell from 79.4 million to 76.7 million in the recent period.
Richard Sarnoff, a KKR MD and co-head of its Technology, Media and Telecommunications industry team, will join Pandora’s board of directors as part of the investment.
According to Sarnoff, Pandora is: “uniquely positioned over the long term given the sheer size of its user base, the quality of its new subscription services and the fact that it has created one of the few scaled streaming media businesses in the US.”
“We believe that the next few years should be transformational for the company,” he added.
The KKR offer is subject to conditions, including regulatory approval, and it is not expected to close earlier than 8 June.
Pandora also announced Feuille is one of two directors from its board who will resign, and an independent committee will be formed to appoint new directors.
“I believe the steps we are taking today offer Pandora the ability to consider all opportunities and to set a course for the future,” said Feuille.
In March, the company launched Pandora Premium, its first on-demand streaming tier.
The number of trial starts across all Pandora’s subscription services stands at 1.3 million, including more than 500,000 for the Premium tier
Pandora rolled out new products for advertisers in January, stating the new tools offer boosts in terms of key metrics.