Sirius XM Holdings Inc. is learned to be the new owner of online music firm Pandora Media Inc. in an effort to bet on the future of streaming entertainment.
Current market value of Pandora, which is rival to market leader Spotify Technology SA, is about $30 billion and the deal struck between the two companies is $3 billion.
With the acquisition of streaming entertainment platform Sirius can offer services beyond cars and important goal of it is to provide financial resources to Pandora to compete with Spotify and Apple Music.
According to Sirius XM Chief Executive Jim Meyer the acquisition is to create growth opportunities together. Pandora has about 70 million monthly active users while its new owner has 36 million paying subscribers in United States and Canada apart from 23 million annual listeners who gets a free period with the purchase of a car. However, it is a fact most of the people do not pay for subscription after completion of the trial period and so Serious XM would continue offer the listeners with ad-supported radio surfing.
In recent years similar music streaming services have increased in the US and by 2018-end the consumer spending on it to jump 29 percent to $6.6 billion.
Last year Sirius bought about 19 percent stake in Pandora paying $480 million, but with the latest news of merger it is being said good things are coming to everyone in music.
Meanwhile, Sirius’ shares dipped 7.5 percent on Monday to $6.46 and that of Pandora climbed 2.9 percent to $9.35.
It is also learned the newly struck deal is under “go-shop” provision, which means Pandora can still talk with other parties for a different deal.
The all-stock deal between Sirius and Pandora may close by April 2019.
Pandora only serves users in the US complying with the protections offered by DMCA. It is a freemium service offering basic features and equipped with advertisements in between. However, it has the option of paid features too under which users gets something more like improved streaming quality and music downloads.
Sirius XM holdings, Inc. is a broadcasting company with three satellite radio and online radio serices.