Its combined revenue with Pandora will go up to $7 billion and the userbase will be at almost 100 million (36 million SiriusXM subscribers and over 70 million monthly Pandora users). Sirius XM acquired a stake in Pandora previous year for US$480 million, giving the online-radio company a lifeline after upstarts such as Spotify Technology SA began luring away streaming-music subscribers. Recently it has lost ground to rivals Spotify and Apple Music, and a year ago it launched a Spotify-like premium on-demand service.
In an all-stock deal, SiriusXM is now acquiring Pandora at a valuation of $3.5 billion.
But a buyout by SiriusXM, which made a $480 million investment in Pandora in June 2017, may be the boost the business needs.
SiriusXM plans to utilize "SiriusXM's extensive automotive relationships to drive Pandora's in-car distribution".
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".
Jim Meyer, Chief Executive Officer of SiriusXM, said: "We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience, and have been impressed by Pandora's strategic progress and stronger execution". "The addition of Pandora will provide diversified revenue streams that will create the world's largest digital audio ad offering ..."
It's expected to close in the first quarter of 2019.
Under the terms of the merger, Pandora stock holders will receive 1.44 shares of SiriusXM for each of their existing shares.
Sirius XM, controlled by media mogul John Malone's Liberty Media Corp, has built a name supplying more than 175 channels to vehicle drivers, but has largely trailed Pandora and Spotify Technology SA in mobile and streaming content.
Following the news, Pandora shares surged more than 8% in early trading Monday, while Sirius XM sank about 3.7%. Pandora has a "go-shop" period in which it can solicit other offers from third parties.