Investment Deal Between Pandora Media Inc (NYSE:P) And KKR Postponed

Pandora Media Inc (NYSE:P), the largest operator of internet radio in the world, has revealed that it is putting off to a later date the closing period for the KKR & Co investment worth $150 million. This is to allow Pandora to explore another offer made by another interested entity which wants to invest in the internet radio firm. Consequently, shares of Pandora fell sharply since many investors had been expecting the KKR deal to be concluded.

In specific terms Pandora indicated that the KKR deal had been postponed indefinitely and the decision had been made jointly by the two parties. The deal which was disclosed a month ago was set to conclude on June 8. This follows revelations which suggested that Sirius XM Holdings and Pandora had been holding talks with a view to having the former taking up an equity investment in the latter after negotiations for a merger collapsed over disagreements concerning price.

Pandora dilemma

If Pandora were to enter a deal with Sirius it would lead to the nullification of the KKR agreement. But by accepting the investment from KKR in return for preferred shares, Pandora’s chief executive officer Tim Westergren would be signaling the fact that all efforts to land a buyer such as Verizon, which is said to be interested in an online music streaming firm, had failed. This presents a dilemma for Pandora since a large investment from KKR Investment or Sirius XM would allow the online radio operator to continue operating independently for longer unprofitably without having to worry about a deal since it would concentrate on growing a user base.

Activist investor

An investment from Sirius XM or KKR would also be a sign that Pandora has managed to rebuff calls by Keith Meister the activist investor at Corvex Management who has been lobbying for the internet radio to sell itself. KKR’s investment in Pandora would have allocated preferred stock to the private equity firm which can later be converted to cash or common stock or a mixture at a price of $13.50 a share.

On Thursday shares of Pandora Media Inc fell by 0.71% to close the day at $8.42.

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