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Sirius XM Invests $480 Million In Pandora

Pandora-new-logo-image-001The rumors were right about talks between Sirius XM and Pandora, but only late yesterday did the chatter shift from acquisition to investment.  This morning Pandora [P] confirmed that U.S. satellite radio company Sirius XM [SIRI.O] would invest $480 million in the music streaming company.

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Under the terms of a deal announced Friday morning, Sirius XM will buy $480 million in series A convertible Pandora preferred stock, representing 19% the music streamer's outstanding shares.

The Sirius investment is convertible into common stock at $10.50 per share, 23.8% above Pandora's Thursday closing price.  

The investment from Sirius XM, which comes just weeks after private equity firm KKR agreed to invest $150 million in Pandora, would prevent Sirius from buying additional Pandora stock for 18 months or to acquire more that 31.5% of the Pandora after that period, with prior Pandora board approval. It is unclear, but seems unlikely, that  Pandora will also take the investment from KKR at this time.

Pandora stock rose 3.5% in the first 10 minutes of active trading on Friday morning.

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