Pandora, Sirius XM deal is windfall for George Soros’ streaming bet

George
Soros is worth an estimated $8 billion on Bloomberg’s
Billionaires Index.

Getty
Images / ChinaFotoPress

• George Soros’ hedge fund owned a
  $56 million stake in Pandora at the end of the second
  quarter on June 30. 
• Even at the highest prices of the quarter, Sirius XM’s
  purchase of Pandora would represent at least a 30% premium on
  his investment, so long as he still holds the
  stock. 
• Sirius XM would give Pandora shareholders 1.44 new
  shares for every Pandora share they own.
• A “go shop” provision allows Pandora to seek a better
  offer. 
• 
  Follow
  Pandora’s stock price in real-time here. 
  

Hedge fund billionaire George Soros disclosed a massive stake in Pandora last month,
and his bet on streaming music appears to have already begun to
pay off.

Soros Fund Management, which bought 7.12 million shares, worth
$56.1 million, during the second quarter, will receive 1.44 newly
issued Sirius XM shares for each Pandora share it owns, at an
implied price of $10.14 per share, as part of the satellite-radio
company’s $3.5 billion, all-stock deal to buy its
streaming competitor.

It’s not clear at what price Soros’ firm made its Pandora
investment, but even at the highest price of the quarter — $7.64
per share — Monday’s deal price represents at least a 32%
premium, making his stake potentially worth $72.2 million in new
shares. 

The hedge fund also disclosed a $122 million stake in
Pandora-competitor Spotify in its second-quarter filing, though
it’s possible that either investment could have been sold between
the quarter’s end on June 30 and today. The disclosures came
as part of what’s called a Form 13-F, in which asset managers
must disclose their quarterly holdings four times per year. Entry
and exit dates, as well as purchase prices, are not required as
part of the regulatory document. 

There’s also a chance the deal could be nixed, either by
government regulators who oversee mergers of this nature, or by a
“go shop” provision included in the terms of the deal. Such a
caveat allows Pandora’s board to follow its fiduciary duty to
shareholders by seeking competing offers.

“We believe there are significant opportunities to create value
for both companies’ stockholders by combining our complementary
businesses,” Jim Meyer, Sirius XM’s CEO,
said in a press release.

“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.”

Following the news, Pandora shares surged more than 8% in early
trading Monday, while Sirius XM sank about 3.7%.