Sirius XM plans to buy Pandora for $3.5 billion

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Pandora is finally catching up.
Pandora is about to become part of Sirius XM.
Photo: Pandora

Two of the biggest companies in the music business are teaming up to try to better take on Spotify and Apple Music.

Sirius XM revealed today that it plans to acquire the music streaming service Pandora in a $3.5 billion all-stock deal. The merger is far from a done deal though and according to a report, Pandora will have the opportunity to find a better deal from another company.

If the deal goes through it would make Sirius XM the largest audio entertainment company in the world. SiriusXM would be able to combine its 36 million subscribers with Pandora’s 70 million monthly active users, giving it over $7 billion in combined revenue for 2018.

Sirius XM x Pandora

Both Apple Music and Spotify currently have over 40 million paid subscribers each. Apple doesn’t disclose how much revenue Apple Music brings in, but it’s a huge part of its services business that is already the size of a Fortune 100 company.

SiriusXM’s acquisition of Pandora is expected to be completed by the first quarter of 2019. CNBC reports that the agreement includes a “go-shop” provision, allowing Pandora to actively “solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals.”

It doesn’t seem like Apple and Spotify are interested in buying Pandora. Amazon, Google or Microsoft may take another look at the company though to see if it fits with their businesses.

Pandora’s stock is trading up 3.3% today at $9.38 per share after the news broke. Sirius XM’s stock is down 6.95% at $6.50 per share.