Sirius acquired a stake in Pandora previous year for $480 million, giving the online-radio company a lifeline after upstarts such as Spotify Technology SA began luring away streaming-music subscribers. The combination will also help Sirius expand beyond an audience that largely listens while driving.
Once the deal goes through, SiriusXM will become the largest audio entertainment company in the entire world. Following the acquisition, both services will continue to operate, and "there will be no immediate change in listener offerings", SiriusXM wrote.
Sirius XM, controlled by media mogul John Malone's Liberty Media Corp FWONA.O , has built a name supplying more than 175 channels to vehicle drivers, but has largely trailed Pandora, Spotify Technology SA SPOT.N and Apple AAPL.O in mobile and streaming content. SiriusXM has previously invested $480 million on the music streaming service, so the two weren't strangers before this.
Still, Pandora has found itself in a hard position in the streaming market as alternatives like Apple Music (aapl) and Spotify (spot) continue to attract more members.
SiriusXM said it will benefit from Pandora's "mobile strength, digital presence, and ad capabilities" while Pandora will benefit from its "scale, industry expertise, and financial resources".
The transaction would combine SiriusXM's 36 million subscribers in North America with Pandora's more than 70 million monthly active users. And SiriusXM's relationships with automobile companies will open the door for Pandora to have better distribution in that market.
Both companies' boards have approved the deal, which is expected to close in 2019's first quarter.
Sirius XM already has a 15 per cent stake in Oakland, California-based Pandora, the companies said in a statement Monday. It is subject to approval by PANDORA stockholders, expiration or termination of any applicable waiting period under the HART-SCOTT-RODINO Antitrust Improvements Act and certain competition laws of foreign jurisdictions and other customary closing conditions. SiriusXM's stock tumbled 7.5 percent.