Yes the money is nice but the company also gets three board seats, including the Chairman’s seat, and a big piece of the company. Here’s how the investment will work. A subsidiary of SiriusXM will purchase $480 million in newly issued Series A convertible preferred stock of Pandora. SiriusXM will purchase $172.5 million of the Series A preferred stock upon execution of the agreement and has the balance at a second closing. The Series A preferred stock will give SiriusXM a 19% stake in Pandora and a 16% stake on an as-converted basis.
SiriusXM will be subject to certain standstill restrictions, including, among other things, that it will be restricted from acquiring additional securities of Pandora for 18 months. After that period and for so long as a director designated by it is serving on the Board of Directors, SiriusXM has agreed not to acquire more than 31.5% of Pandora’s equity securities without the approval of Pandora’s Board of Directors.
The second closing contemplated by the agreement is subject to customary closing conditions, including antitrust approval, and is expected to close by the fourth quarter. The agreement may be terminated by either party if closing has not occurred by February 1, 2018.
SiriusXM CEO Jim Meyer says, “This strategic investment in Pandora represents a unique opportunity for SiriusXM to create value for its stockholders by investing in the leader in the ad-supported digital radio business, a space where SiriusXM does not play today. Pandora’s large user base and its ability to provide listeners with a personalized music experience are tremendous assets. With its strong technology and new product offerings, we believe there are exciting opportunities for Pandora to accelerate its growth and increase value for Pandora and SiriusXM stockholders.”
