Shares of Pandora (NYSE:P) fell 6.97% in Wednesday afternoon trading as the streaming music service company’s timeline to sell nears its closing date.
Thursday marks a self-imposed deadline for the struggling company to sell its business within a 30-day window, which, based on reports last month, it was confident it could do.
On May 8, private equity firm KKR struck a $150 million investment deal with Pandora, which is set to close on June 8. In return, KKR received a board seat. However, according to a CNBC report, if Pandora is able to sell itself within the 30-day deadline, it will have to pay KKR $15 million, which the company viewed as an insurance-like policy.
Pandora reportedly saw the large KKR investment improving the likelihood it could sell itself. “Having secured a significant financial commitment from KKR to strengthen the Company’s balance sheet, we have positioned the Company to evaluate any potential strategic alternatives, including a sale, in the 30 days before the financing is set to close,” James M. P. Feuille, a Pandora board member who resigned as part of the deal, said in a statement last month.
“I believe the steps we are taking today offer Pandora the ability to consider all opportunities and to set a course for the future.”
Sirius XM (NASDAQ:SIRI) and its majority owner Liberty Media (NASDAQ:FWONA) have been interested in a deal to acquire the struggling online music service since last summer, when Pandora rejected a July takeover offer. Since then, the two sides have seemed unable to reach a price point for a buyout.
The New York Post first reported that Verizon (VZ) could also potentially invest $100 million in Pandora preferred stock if the company fails to sell by June 8.
Investors seem to be worried that even with strong incentive to try to sell, Pandora could not find a suitor as shares closed down almost 8% yesterday. Pandora’s stock price had fallen 17% in the past month, and it is currently trading near its 52-week low and only $1 above its all-time low.
Apple’s (NYSE:P) Apple Music and Spotify’s continued growth has hurt Pandora’s premium ad-free service. On top of that, its original advertising-based personalized streaming music service continually fails to expand its user base.
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