NEW YORK and OAKLAND, Calif., June
9, 2017 /PRNewswire/ -- SiriusXM (NASDAQ: SIRI) and Pandora
(NYSE: P) today announced an agreement under which SiriusXM will
make a $480 million strategic cash
investment in Pandora.
Under the terms of the agreement, a subsidiary of SiriusXM will
purchase an aggregate of $480 million
in newly issued Series A convertible preferred stock of Pandora.
SiriusXM purchased $172.5 million of
Series A preferred stock upon execution of the agreement and has
agreed to purchase the balance of the Series A preferred stock at a
second closing. The Series A preferred stock will represent a stake
of 19% of Pandora's currently outstanding common stock and a 16%
stake on an as-converted basis.
The Series A preferred stock is convertible into common stock at
a purchase price of $10.50 per share.
The conversion price of the Series A preferred stock is
approximately a 14.2% premium to Pandora's volume weighted average
price for the 20-day period preceding June
9, 2017. The Series A preferred stock will bear a 6%
cumulative dividend, payable in cash, accretion of the Series A
preferred stock or a combination thereof.
Through this agreement, SiriusXM is making a strategic
investment in the leading U.S. provider of ad-supported digital
radio. With a loyal quarterly audience of nearly 100 million
listeners in the U.S., Pandora is by far the leading player in the
burgeoning digital audio advertising market. The capital provided
through the SiriusXM investment will allow Pandora to make targeted
investments and capitalize on opportunities to build on its
position in the streaming radio business.
Jim Meyer, Chief Executive
Officer of SiriusXM, said, "This strategic investment in Pandora
represents a unique opportunity for SiriusXM to create value for
its stockholders by investing in the leader in the ad-supported
digital radio business, a space where SiriusXM does not play today.
Pandora's large user base and its ability to provide listeners with
a personalized music experience are tremendous assets. With its
strong technology and new product offerings, we believe there are
exciting opportunities for Pandora to accelerate its growth and
increase value for Pandora and SiriusXM stockholders."
"Liberty Media has long recognized the strength of the Pandora
brand and the opportunities in the ad-supported digital radio
market," said Greg Maffei, Chairman
of the SiriusXM Board of Directors and Chief Executive Officer of
Liberty Media Corporation. "We are very supportive of SiriusXM's
strategic investment."
When the transaction closes, three individuals designated by
SiriusXM will be named to the Pandora Board of Directors. One of
those individuals will serve as Chairman and SiriusXM designated
directors will serve as select Board committee representatives.
With these appointments, the Pandora Board will be expanded to
consist of nine directors.
"Pandora's Board and management team are committed to driving
stockholder value and have carefully evaluated alternative
strategies as part of the process disclosed on May 8," said Tim
Leiweke, member of Pandora's Board of Directors. "We are
pleased that the conclusion of that process resulted in a major
investment by SiriusXM. With this investment, we have the backing
of one of the media industry's most successful investors and
significant capital to accelerate growth. Pandora is now poised to
advance to the next stage of the company's lifecycle. Lastly, this
transaction ensures that Pandora stockholders get the benefit of
additional capital from an important strategic investor who can
help enhance stockholder value."
"The investment from SiriusXM infuses resources to help Pandora
continue to grow and innovate," said Pandora CEO and founder
Tim Westergren. "With the strategic
review behind us, and a strong balance sheet, we look forward to
focusing on business execution and the optimization of our
strategy."
In connection with the transaction, Pandora agreed with an
affiliate of Kohlberg Kravis & Roberts to terminate their
Investment Agreement announced on May 8,
2017, and pay KKR a termination fee of $22.5 million.
Pandora is required to redeem the Series A preferred stock on
the fifth anniversary of the closing for an amount equal to its
liquidation preference plus all accrued and unpaid dividends.
Pandora can also redeem the Series A preferred stock at any time
after 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% 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.
SiriusXM will be subject to certain standstill restrictions,
including, among other things, that it will be restricted from
acquiring additional securities of Pandora for 18 months. After
that period and for so long as a director designated by it is
serving on the Board of Directors, SiriusXM has agreed not to
acquire more than 31.5% of Pandora's equity securities without the
approval of Pandora's Board of Directors.
The second closing contemplated by the agreement is subject to
customary closing conditions, including antitrust approval, and is
expected to close by the fourth quarter. The agreement may be
terminated by either party if closing has not occurred by
February 1, 2018.
Additional information relating to the SiriusXM investment may
be found in the Form 8-K that will be filed by Pandora with the
U.S. Securities and Exchange Commission.
Allen & Company LLC and BofA Merrill Lynch are serving as
financial advisors to SiriusXM and Jones
Day and Simpson Thacher & Bartlett LLP are serving as
its legal counsel. Centerview Partners LLC and Morgan Stanley &
Co. LLC are serving as financial advisors to Pandora and Sidley
Austin LLP and Wachtell, Lipton, Rosen & Katz are acting as
legal counsel.
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world's largest
radio company measured by revenue and has approximately 31.6
million subscribers. SiriusXM creates and offers commercial-free
music; premier sports talk and live events; comedy; news; exclusive
talk and entertainment, and a wide-range of Latin music, sports and
talk programming. SiriusXM is available in vehicles from every
major car company and on smartphones and other connected devices as
well as online at siriusxm.com. SiriusXM radios and accessories are
available from retailers nationwide and online at SiriusXM.
SiriusXM also provides premium traffic, weather, data and
information services for subscribers through SiriusXM Traffic™,
SiriusXM Travel Link, NavTraffic®, NavWeather™. SiriusXM delivers
weather, data and information services to aircraft and boats
through SiriusXM Aviation™ and SiriusXM Marine™. In addition,
SiriusXM Music for Business provides commercial-free music to a
variety of businesses. SiriusXM holds a minority interest in
SiriusXM Canada which has approximately 2.8 million subscribers.
SiriusXM is also a leading provider of connected vehicles services,
giving customers access to a suite of safety, security, and
convenience services including automatic crash notification, stolen
vehicle recovery assistance, enhanced roadside assistance and
turn-by-turn navigation.
To download SiriusXM logos and artwork, visit
http://www.siriusxm.com/LogosAndPhotos.
This communication contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements include, but are not limited to,
statements about future financial and operating results, our plans,
objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified
by words such as "will likely result," "are expected to," "will
continue," "is anticipated," "estimated," "believe," "intend,"
"plan," "projection," "outlook" or words of similar meaning. Such
forward-looking statements are based upon the current beliefs and
expectations of our management and are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally
beyond our control. Actual results and the timing of events may
differ materially from the results anticipated in these
forward-looking statements.
The following factors, among others, could cause actual
results and the timing of events to differ materially from the
anticipated results or other expectations expressed in the
forward-looking statements: our substantial competition, which is
likely to increase over time; our ability to attract and retain
subscribers, which is uncertain; interference to our service from
wireless operations; consumer protection laws and their
enforcement; unfavorable outcomes of pending or future litigation;
the market for music rights, which is changing and subject to
uncertainties; our dependence upon the auto industry; general
economic conditions; the security of the personal information about
our customers; existing or future government laws and regulations
could harm our business; failure of our satellites would
significantly damage our business; the interruption or failure of
our information technology and communications systems; our failure
to realize benefits of acquisitions or other strategic initiatives;
rapid technological and industry changes; failure of third parties
to perform; our failure to comply with FCC requirements;
modifications to our business plan; our indebtedness; our principal
stockholder has significant influence over our affairs and over
actions requiring stockholder approval and its interests may differ
from interests of other holders of our common stock; impairment of
our business by third-party intellectual property rights; and
changes to our dividend policies which could occur at any time.
Additional factors that could cause our results to differ
materially from those described in the forward-looking statements
can be found in our Annual Report on Form 10-K for the year ended
December 31, 2016, which is filed
with the Securities and Exchange Commission (the "SEC") and
available at the SEC's Internet site
(http://www.sec.gov). The information set forth
herein speaks only as of the date hereof, and we disclaim any
intention or obligation to update any forward looking statements as
a result of developments occurring after the date of this
communication.
About Pandora
Pandora is the world's most powerful music discovery platform -
a place where artists find their fans and listeners find music they
love. We are driven by a single purpose: unleashing the infinite
power of music by connecting artists and fans, whether through
earbuds, car speakers, live on stage or anywhere fans want to
experience it. Our team of highly trained musicologists analyze
hundreds of attributes for each recording which powers our
proprietary Music Genome Project®, delivering billions of hours of
personalized music tailored to the tastes of each music listener,
full of discovery, making artist/fan connections at unprecedented
scale. Founded by musicians, Pandora empowers artists with valuable
data and tools to help grow their careers and connect with their
fans.
This press release contains forward-looking statements within
the meaning established by the Private Securities Litigation Reform
Act of 1995, including, but not limited to, statements regarding
expected revenue and adjusted EBITDA. These forward-looking
statements are based on Pandora's current assumptions, expectations
and beliefs and involve substantial risks and uncertainties that
may cause results, performance or achievement to materially differ
from those expressed or implied by these forward-looking
statements. Factors that could cause or contribute to such
differences include, but are not limited to: our operation in an
emerging market and our relatively new and evolving business model;
our ability to estimate revenue reserves; our ability to increase
our listener base and listener hours; our ability to attract and
retain advertisers; our ability to generate additional revenue on a
cost-effective basis; competitive factors; our ability to continue
operating under existing laws and licensing regimes; our ability to
enter into and maintain commercially viable direct licenses with
record labels for the right to reproduce and publicly perform sound
recordings on our service; our ability to establish and maintain
relationships with makers of mobile devices, consumer electronic
products and automobiles; our ability to manage our growth and
geographic expansion; our ability to continue to innovate and keep
pace with changes in technology and our competitors; our ability to
expand our operations to delivery of non-music content; our ability
to protect our intellectual property; risks related to service
interruptions or security breaches; and general economic conditions
worldwide. Further information on these factors and other risks
that may affect the business are included in filings with the
Securities and Exchange Commission (SEC) from time to time,
including under the heading "Risk Factors" in our Annual Report on
Form 10-K for the current period.
The financial information contained in this press release
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's most recent
reports on Form 10-K and Form 10-Q, each as they may be amended
from time to time. The Company's results of operations for the
current period are not necessarily indicative of the Company's
operating results for any future periods.
These documents are available online from the SEC or on the
SEC Filings section of the Investor Relations section of our
website at investor.pandora.com. Information on our
website is not part of this release. All forward-looking statements
in this press release are based on information currently available
to the Company, which assumes no obligation to update these
forward-looking statements in light of new information or future
events.
Contacts:
For SiriusXM:
Media:
Patrick
Reilly
212-901-6646
patrick.reilly@siriusxm.com
Investors:
Hooper Stevens
212-901-6718
hooper.stevens@siriusxm.com
For Pandora:
Dominic
Paschel, 510-842-6960
Corporate Finance & Investor Relations
investor@pandora.com
or
Hani Durzy, 415-385-4264
PR & Corporate Communications
hdurzy@pandora.com
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SOURCE SiriusXM