Pandora Media Inc. (NYSE: P) was falling in Tuesday’s session following news of a recent acquisition. The company announced an agreement to acquire several key assets from Rdio, a pioneer in streaming music technology, for the price of $75 million in cash.
The company believes that this will accelerate its plan to offer fans greater control over the music they love, strengthening Pandora’s position as the definitive source of music. The transaction is subject to the approval of the Bankruptcy Court, which will supervise an auction for the assets of Rdio, as well as other customary closing conditions.
The transaction is contingent on Rdio seeking protection in the U.S. Bankruptcy Court for the Northern District of California. Upon approval of the proposed transaction by the bankruptcy court, Rdio will be winding down its branded service in all markets.
An important distinction to make is that Pandora is not acquiring the operating business of Rdio, but the technology and talent to accelerate its own business strategy.
Brian McAndrews, CEO of Pandora, said:
Whether streaming through radio, on-demand or in-person at live events, Pandora is building the definitive source for fans to discover and celebrate music. Wherever and however fans want to hear music, we intend to be their go-to destination.
Anthony Bay, CEO of Rdio, added:
The Rdio team built an acclaimed product and technology platform that has consistently led innovation in the young streaming industry. I’m pleased that many members of the Rdio team will continue to shape the future of streaming music, applying our tradition of great design and innovative engineering on an even larger stage with Pandora.
Shares of Pandora were last seen trading down 7% at $12.50, with a consensus analyst price target of $19.46 and a 52-week trading range of $11.38 to $22.60.
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