Pandora shares were up 2.9% on Friday morning while SiriusXM was down 1.6%. The Internet radio service reported ($0.37) earnings per share (EPS) for the quarter, topping the consensus estimate of ($0.50) by $0.13. The company's stock had a trading volume of 62,572,993 shares.
After the streamer arrogantly demanded $20 per share, SiriusXM walked away, sending stock shares plunging. Maffei allegedly made an informal offer for Pandora at around $15 share early previous year. Yet, it managed to find a backer to remain afloat another month. However, the deal gave Pandora about 30 days to decide on a sale, and that deadline was met Thursday. "We are divesting non-strategic businesses and allocating our resources and capital to ensure the timely delivery of our new products, returning Verifone to growth in 2018".
Panic set in. On February 1st, 2016, the stock closed at exactly $8 per share.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. The last time Pandora Radio slumped below $8 was on November 5th, 2012, when it closed at $7.55 per share.
Now, as Pandora Radio continues bleeding money, a white knight has appeared.
A deal between the two companies had been a matter of speculation in recent weeks, but the possibility seemed to be off the table when the company announced last month that it had accepted a $150 million investment by KKR.
The investment will come in the form of newly-issued Series A convertible preferred Pandora stock.
Sirius XM will be receiving convertible preferred stock in the deal, a 19% chunk of Pandora's current outstanding shares or a 16% position on an as-converted basis.
It's unlikely that much will change at either Pandora or SiriusXM for consumers.
The new agreement will allow SiriusXM a way into the music streaming market. That's also a better fit with Sirius's satellite-radio business than a subscription-based model would be.
Pandora is facing competition from more and more music streaming options-Apple Music, Spotify, Amazon Music Unlimited, etc. The Automatic acquisition, however, opens the door to two-way communication, via the driver's own smartphone.
As part of the deal SiriusXM will get three seats on Pandora's (now nine-person) Board of Directors, with one of those acting as Chairman.
PiperJaffray's Stan Meyers says that although the deal is not "the full-takeout we once expected, it does meaningfully strengthen Pandora's balance sheet, which has been weighing in on the stock and delivers a strategic partner that can help grow Pandora in the vehicle". Of course Pandora rejected it, and so here we are today with a transaction that's less than ideal for its shareholders. Or will the SiriusXM agreement finally help turn things around? (P) now has a value of $8.42 while the company's 52 week low is at $8.14, the shares dropped to the 52 week low on 06/07/17.