Sirius XM Holdings Inc. has agreed to acquire Pandora Media Inc. in a $3.5 billion deal, helping the satellite-radio company controlled by billionaire John Malone expand into online music.
The all-stock transaction values Pandora at $10.14 a share, about 12 percent more than the company’s closing price on Friday. Sirius XM already has a 15 percent stake in Oakland, California-based Pandora, the companies said in a statement Monday.
The combination will help Sirius XM expand beyond an audience that largely listens to the satellite radio company’s programs while driving. Sirius XM acquired a stake in Pandora last year for $480 million, giving the online-radio company a lifeline after upstarts such as Spotify Technology SA began luring away streaming-music subscribers.
Pandora has introduced its own on-demand music service and brought in former Sling TV chief executive Roger Lynch a year ago to work on a turnaround.
Pandora shares jumped 8.6 percent, to $9.87 each, in morning trading. That’s below its 2018 closing high of $9.97 earlier this month. Sirius XM shares fell 4.4 percent, to $6.67.
Pandora's shares had surged 89 percent this year through Friday after setbacks in 2017 sank the stock. The company recovered this year after showing it could attract new paying subscribers and fend off music-streaming competitors ranging from Spotify to Amazon.com Inc. Pandora had about 6 million subscribers at the end of the second quarter.
Sirius XM and Pandora said the transaction is expected to be completed in the first quarter of next year.