Pandora Shareholders May Reject SiriusXM Offer, Analyst Says
SiriusXM stock's 10.3 percent fall Monday led Wedbush Securities' Michael Pachter Tuesday to forecast shareholders will reject the $3.5 billion takeover (see 1809240047). “Given that the exchange ratio is fixed,” the implied deal price was just above $9 a share,…
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nearly 1 percent below Pandora’s closing Friday, the analyst wrote investors. The companies didn’t comment. Sirius “could have easily divested a large cash component," said its Chief Financial Officer David Frear when asked on a Monday conference call why the deal was structured as all-stock. “The trouble with a cash component is you’re reducing the equity upside for Pandora shareholders.” Pachter rates the deal a win-win nonetheless for both partners. In light of Pandora’s “history of losses” and the “intense competitive environment” in the streaming-music space, Dougherty's Steven Frankel rates the “offer as fair” for Pandora shareholders. Frankel doesn't expect “competing bids.” Pandora can walk if it pays Sirius $105 million in termination fees, said an SEC filing Monday. That “was an important component for our board,” said Pandora CEO Roger Lynch.