Pandora Media Inc. is getting a $480 million investment from Sirius XM Holdings Inc. and selling its Ticketfly business to Eventbrite for $200 million as the internet-radio pioneer tries to revive its business and find a possible buyer.
The deals will help Oakland, California-based Pandora grapple with widening losses and a tepid outlook for its online music business. The fast growth of Spotify and Apple Music, along with the billions of dollars Amazon.com Inc. and Google are investing in music, has pressured Pandora to expand beyond its roots as an internet radio company and become a streaming service seeking paying subscribers.
Though Pandora has also diversified into ticketing and artist services, investors such as the hedge fund Corvex Management LP have questioned that strategy and urged a possible sale because of losses and a tumbling stock price.
Shares of Pandora rose as much 6.2 percent to $9 in New York Friday, while Sirius XM was little changed.
The transactions announced Friday will arm the company with a “strong balance sheet, sharpen operational focus, and strengthen the company’s board of directors,” it said in a statement.
The strategic cash investment by Sirius XM represents a 19 percent stake in Pandora’s common stock, according to a separate statement. Sirius XM will name three people to Pandora’s board, with one serving as chairman. The board will also expand to nine directors.
Sirius XM, the satellite-radio provider controlled by billionaire John Malone, has at times expressed interest in doing a deal for Pandora, though its executives have downplayed their desire for a merger on other occasions, saying Pandora was too expensive. After weeks of talks, Pandora and Sirius found common ground on the Oakland, California, company’s value, Bloomberg has reported.
Pandora said Thursday that the closing of its $150 million investment from private-equity firm KKR & Co. had been postponed, giving the company time to explore interest from an unidentified strategic investor. In light of the Sirius XM investment, Pandora agreed to terminate the KKR deal and pay a $22.5 million termination fee.
As part of the deal, SiriusXM purchased $172.5 million Series A preferred stock, and agreed to buy the rest at a second closing. The stock is convertible into common stock at $10.50 a share, a 14 percent premium to Pandora’s average price for the 20-day period preceding June 9.
Sirius XM won’t be able to buy additional securities of Pandora for 18 months. Afterward, if one of its directors is serving on board, Sirius won’t buy more than 31.5 percent of Pandora’s securities without board approval.
As for Ticketfly, Eventbrite will fund the purchase through a combination of $150 million in cash and a $50 million note payable to Pandora, according to a separate statement Friday. The companies will enter into an arrangement that will allow Pandora to further “broaden the scale of its ticketing opportunities,” the company said.
Pandora paid $335 million for Ticketfly in 2015, a move then-CEO Brian McAndrews hailed as a “game-changer.” Ticketfly handles ticket sales for hundreds of venues across North America, and Pandora has tried to use the data it has about music fans to sell more tickets. Founded by Andrew Dreskin, Ticketfly competes with Live Nation Entertainment Inc.’s Ticketmaster, the market leader. Ticketmaster acquired Dreskin’s previous startup, TicketWeb.
Pandora, led by Chief Executive Officer Tim Westergren, stepped up its search for an acquirer last month after announcing the KKR deal and was said to be considering a Ticketfly sale if it couldn’t find a buyer for the entire company.
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