SiriusXM has completed its previously outlined $480 million strategic investment in Pandora. The companies announced on Friday that a subsidiary of the satellite radio giant has purchased the remaining $307.5 million of Series A preferred stock in Pandora — the initial $172.5 million-worth of stock was acquired on June 9, the day the investment was announced.
For its 16 percent preferred stake, convertible into 19 percent common shares, SirusXM receives a spot at the on-demand streaming table, as well as three seats on Pandora’s board. Upon closing of the investment, SiriusXM chairman Gregory B. Maffei, CEO James E. Meyer and CFO David J. Frear officially joined Pandora’s board of directors, with Maffei taking the chairman role. With the departure of longtime member Elizabeth Nelson, the board now consists of nine directors.
According to terms of the sale, “SiriusXM may require Pandora to redeem the preferred stock beginning on Sept. 22, 2022, the fifth anniversary of the closing, for an amount equal to its liquidation preference plus all accrued and unpaid dividends. Pandora may also redeem the Series A preferred stock at any time after Sept. 22, 2020, the third anniversary of the closing, if the daily volume weighted average price of Pandora’s common stock is greater than or equal to 175 percent of the then applicable conversion price for a period of at least 20 days during a 30 day trading window prior to the notice of redemption.”
Pandora recently completed its previously announced sale of Ticketfly to Evenbrite for $200 million. Coupled with the SiriusXM investment, the added cash buys Pandora time to prove it can build a successful and profitable on-demand music service.
For detailed analysis on what the investment and sale mean for the future of Pandora, click here.