Tuesday, May 9, 2017

Pandora raises $150 million in new investment, considers sale | UNLIMITED | CMU


Pandora has raised $150 million in new funding and is now considering selling itself to a new owner, the company announced yesterday. This follows the streaming service reporting a $132 million loss in the first quarter of this year.

The new cash injection comes from investment firm KKR, which gets in return an equivalent amount of preferred stock in the company. It also has the option to increase the investment to $250 million, if Pandora decides to issue new shares of this type – although currently, the company stresses, only the amount created for this deal are available.

In addition, KKR’s Head of Media & Communications Private Equity, Richard Sarnoff, will join the company’s board of directors. He says: “We are excited to support the long-term growth of Pandora with this investment. A true pioneer in digital music, we believe that Pandora is uniquely positioned over the long term given the sheer size of its userbase, the quality of its new subscription services and the fact that it has created one of the few scaled streaming media businesses in the US”.

“The launch of Pandora Premium is yet another example of innovation at a company that created the modern-day music recommendation engine”, he goes on. “And we believe that the next few years should be transformational for the company”.

Pandora’s CFO Naveen Chopra adds: “We are happy to be partnering with KKR on this investment. A strong balance sheet gives us the ability to accelerate growth investments when appropriate and to compete aggressively in a rapidly changing, complex market”.

Just minutes after KKR’s new investment was announced, Pandora issued a second press release stating that there would be further changes to its board of directors, and that it was now considering a number of new strategies for its future, including selling up. Longtime board members James Feuille and Peter Gotcher are to resign, with an independent committee – led by former AEG CEO Tim Leiweke – set up to find replacements.

“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”, says Feuille, as he departs. “I believe the steps we are taking today offer Pandora the ability to consider all opportunities and to set a course for the future. I thank my colleagues and our stockholders for their support, and look forward to following Pandora, whose future I truly believe is exciting”.

Leiweke adds: “The governance measures we have undertaken today have the support of our major stockholders. The board is squarely focused on maximising stockholder value as we move ahead”.

There have been rumours that Pandora would offer itself up for sale for some time now. A year ago, the company’s then largest shareholder Corvex Management expressed dismay that the company was not taking this route, but was rather “pursuing a costly and uncertain business plan”.

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