Shares of Pandora Media (NYSE:P) gained as much 7% in early morning trading Friday after the music streaming service announced that it closed an investment deal with SiriusXM (NASDAQ:SIRI) , the global leader in satellite radio.
The new partnership will see SiriusXM make a $480 million cash investment in Pandora, a deal that came about after Pandora reportedly rejected a full takeover offer from the company. Sources cited by CNBC also said that Jim Meyer, current CEO of Sirius, or Greg Maffei, current CEO of Sirius majority owner Liberty Media (NASDAQ:FWONA), will fill the role of chairman for Pandora.
“Pandora's large user base and its ability to provide listeners with a personalized music experience are tremendous assets,” said Meyer. “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.”
It’s been a wild week for Pandora, which has been the subject of buyout speculation for some time. On Wednesday, shares of the music service tanked nearly 7% as the company neared its deadline to decide on a new strategic initiative.
Last month, Pandora reached a preliminary deal with KKR, an investment firm known for private equity deals, on a $150 million investment. However, the deal gave Pandora about 30 days to decide on a sale, and that deadline was met Thursday. Both companies agreed to push back the investment after Pandora reported that it was exploring a significant minority investment.
Pandora, which revolutionized digital music listening with its “internet radio” concept, has struggled to fend off competition from Amazon (NASDAQ:AMZN) , Apple (NYSE:P) , and Spotify—competitors that offer services with more personalized platforms.
Pandora remains one of the more popular mobile applications in the world, and it recently launched a Spotify-like subscription service, but some investors feared the move wasn’t enough to turn the tides for the company.
It will be interesting to see what SiriusXM and its large network of satellite radio connected cars can do with Pandora.
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