Pandora stock was up Monday on news of a deal with rival SirusXM (NASDAQ:SIRI).
The big news for Pandora (NYSE:P) is that SirusXM plans to acquire the company. This will having the latter using its own stock to acquire Pandora stock. Holders of Pandora stock will receive 1.44 shares of newly-issued SiriusXM stock for each share they own.
The value of each share of SIRI stock in the deal is $7.04. That number is based on the stock’s 30-day volume-weighted average price. This implies that each share of Pandora stock has a value of $10.14. It also represents a roughly 11% premium to P stock’s closing price on Friday. Also worth noting is that SIRI already owns a 15% stake in the music streaming company via convertible preferred stock.
The deal between Pandora and SirusXM has a total value of $3.50 billion. The combination of the two companies will create the largest audio entertainment company in the world with estimated yearly revenue of $7 billion.
The deal already has the unanimous approval of the independent directors for Pandora’s Board, as well as unanimous approval from SiriusXM’s Board of Directors. The deal will still need to complete customary closing conditions, such as getting approval from regulators and holders of Pandora stock.
If all goes well, Pandora and SirusMX are looking for the deal to reach completion during the first quarter of 2019.
P stock was up 2% and SIRI stock was down 8% as of noon Monday.
As of this writing, William White did not hold a position in any of the aforementioned securities.