The music streaming service Pandora admitted earlier this week that it was weighing in an idea for a minority stake purchase. The interested party in this transaction remained anonymous until multiple negotiations between Pandora and Sirius XM gave the deal away. Last meetings opened up the subject of a $150 million investment from KKR. However, Pandora asked for an extension of the deal deadline.
Pandora Postponed Minority Stake Acquisition Presumably to Explore a Sirius XM Negotiation
On Thursday morning, Pandora announced that it is going to postpone the $150 million transaction for a minority stake. The explanation that accompanied the statement referred to the company’s wish to consider better the implications of such a major business decision. Last month, Pandora agreed on a KKR investment. However, the private equity fund gave the streaming service only 30 days at its disposal to explore the opportunity.
While all evidence points at Sirius XM as being the sole interested party in this event, CFO David Frear denied these claims. As of recently, he informed his stakeholders that there are low chances for such a transaction to take place. Nonetheless, the recent postponing of Pandora’s KKR investment might hide a different story.
If Pandora Refuses KKR Proposition, the Company Will Pay $15 Million
Sirius XM might not have come up with a clear offer, yet media agencies reported that the company was looking into a private equity investment in Pandora. There are no official numbers to confirm the real value of such a proposition. However, Sirius might consider offering a similar or even equal investment to that coming from KKR.
On the other hand, Pandora might not have such a free saying in this situation. If the deal between the music streaming service and KKR falls, the company will be obliged to pay KKR $15 million as compensation. However, analysts are considering the pairing between Pandora and Sirius XM a fortunate one. The two of them can greatly benefit from each other. Pandora would receive a much-needed support for its subscriber base while Sirius will gain entrance to a new influential market.
Image source: 1