This deal comes as the next logical step after SiriusXM bought 19% of Pandora's stock for $480 million last year and everyone saw it as a clear hint at a future acquisition.
The satellite radio SiriusXM company has more than 36 million North American subscribers, while Pandora's music streaming platform comes with 70+ million monthly active users.
Combining the two platforms will allow Pandora and SiriusXM to compete with the other big players in the audio streaming industry, Spotify, Apple Music, Amazon, and Tidal.
As described by both companies in their press releases, the combined company resulting from this transaction will become the largest audio entertainment entity in the world, with expected revenue of more than $7 billion in 2018 and substantial future growth opportunities.
The new company will own the largest audio entertainment platform in the world
The new company will be able to combine Pandora's subscription and ad-supported tiers with SiriusXM's exclusive programming and content to design innovative audio packets, while also allowing Pandora to join SiriusXM's in-car content distribution model.
Furthermore, using Pandora's music streaming platform, the satellite radio company will have the opportunity to expand beyond car entertainment systems into Americans' homes and onto their mobile devices.
SiriusXM also said in their press release that the new company would continue to invest in innovation and new tech, as well as content and novel monetization opportunities via subscription and ad-supported services.
"The addition of Pandora diversifies SiriusXM'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," said Jim Meyer, Chief Executive Officer of SiriusXM.
SiriusXM announces agreement to acquire Pandora http://t.co/FhvAFC8mIL pic.twitter.com/fWNk5EEhxW — SiriusXM (@SIRIUSXM) September 24, 2018