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Sirius XM’s Stock Drops and Pandora’s Pops After $3.5 Billion Merger Announcement

Shares of satellite radio company fall 6 percent on the buyout

Some Sirius XM investors aren’t liking what they’re hearing on Monday, after the satellite radio company announced its $3.5 billion buyout of Pandora.

Shares of Sirius XM dropped more than 6 percent to $6.53 a share in early market trading on news of the all-stock deal. Pandora, on the other hand, is enjoying a 3 percent bump, hitting $9.37 a share about 45 minutes after the market opened. That increase was expected, with Sirius XM paying an implied price of $10.14 per share — around a 15 percent premium — in its deal with Pandora.

“We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses,” Sirius XM CEO Jim Meyer said in a statement. “The addition of Pandora diversifies Sirius XM’s revenue streams with the U.S.’s largest ad-supported audio offering, broadens our technical capabilities, and represents an exciting next step in our efforts to expand our reach out of the car even further.”

Pandora — one of the first platforms to usher in the music streaming era — has more than 70 million monthly listeners, but faces stiff competition from Spotify and Apple Music, among others. Sirius XM, which already owned a 15 percent  stake in Pandora before Monday’s announcement, has 36 million paying subscribers in the U.S., according to its release. Both companies will continue to operate independently, Meyer said.