News

BREAKING NEWS FROM CNBC’S DAVID FABER: SIRIUSXM OFFERED TO BUY PANDORA FOR $8 PER SHARE – SOURCES

WHEN: Today, Friday, June 9th WHERE: CNBC’s “Squawk on the Street” Following is the unofficial transcript of breaking news from CNBC’s David Faber on “Squawk on the Street” (M-F, 9AM-11AM ET) today, Friday, June 9th. Following is a link to the article on CNBC.com:http://www.cnbc.com/2017/06/09/siriusxm-announces-pandora-investment-aft.... All references must be sourced to CNBC.

DAVID FABER: WELCOME BACK. SHARES OF PANDORA MOVING AROUND A LOT THIS MORNING AFTER NEWS WE FIRST BROUGHT YOU, BUT OF COURSE, IT HAS BEEN CONFIRMED BY THE COMPANY. SIRIUSXM MAKING A $480 MILLION INVESTMENT IN PANDORA. ADDITIONALLY, THE COMPANY IS ALSO SELLING ITS TICKET FLY DIVISION FOR ABOUT $200 MILLION. SO $680 MILLION COMING IN TO PANDORA. IT MAY NEED ALL OF IT, OF COURSE, TO CONTINUE TO FUND THE BUILDOUT OF ITS SUBSCRIPTION SERVICE. BUT THE BIGGER PICTURE HERE, OF COURSE, IS THE BACK AND FORTH BETWEEN PANDORA AND SIRIUS THAT'S BEEN GOING ON AND ON FOR MONTHS AND MONTHS. IT WAS QUITE A FEW MONTHS AGO THAT WE FIRST REPORTED THAT PANDORA WAS FINALLY OPEN TO ENTERTAINING TAKEOVER OFFERS. IT EMPLOYED CENTER VIEW, THE INVESTMENT BANK, IN TRYING TO SEE WHETHER THERE WERE ANY OFFERS OUT THERE. THE MOST LIKELY BUYER ALL ALONG HAD BEEN SIRIUS. BUT THE STOCK PRICE ITSELF DID NOT HELP. A YEAR AGO THIS TIME, THEY MIGHT HAVE BEEN ABLE TO SELL THIS COMPANY FOR 15 BUCKS A SHARE TO SIRIUS. THAT WAS CERTAINLY NO LONGER THE CASE DESPITE THE PRESENCE OF SIGNIFICANT SHAREHOLDERS AND ACTIVIST SHAREHOLDERS SUCH AS CORVEX, THEY WERE UNABLE TO COME ANYWHERE NEAR A PRICE LIKE THAT FOR THE COMPANY, WHICH AGAIN, HAS BEEN STRUGGLING TO A CERTAIN EXTENT AS IT HAS MOVED INTO THE SUBSCRIPTION BASED SERVICE. SO A MONTH AGO, THEY SIGNED UP A DEAL TO BRING IN AS MUCH AS $200 MILLION POTENTIALLY IN CAPITAL IN THE FORM OF CONVERT FROM KKR THAT WOULD HAVE HAD AN 8% COUPON AND A CONVERSION PRICE OF $13.50. THIS MORNING, $480 MILLION FROM SIRIUS, A LOT MORE MONEY, A 6% COUPON, LESS THERE. BUT GET THIS. THE STRIKE PRICE, 10.50. IT COMES DOWN BY $3 A SHARE. THINK OF IT PERCENTAGE WISE OVER ONE MONTH. REALLY KIND OF SHOCKING WHEN YOU THINK ABOUT IT. OTHER THINGS TO ADD HERE AS WELL. SIRIUS HAD OFFERED, I'M TOLD BY PEOPLE FAMILIAR WITH THE SITUATION, TO BUY ALL OF PANDORA FOR $8 A SHARE AND WAS REJECTED, OF COURSE, AS YOU MIGHT HAVE EXPECTED. AND HENCE, ENDED UP WITH THIS DEAL, WHICH INCLUDES THREE BOARD SEATS, ONE OF WHICH IS THE CHAIRMANSHIP. THE HOPE, OF COURSE, ON THE PART OF SIRIUS, IS IT WILL BE ABLE, JIM, TO REALLY HELP THIS COMPANY START TO BUILD TOWARD A FUTURE THAT'S NOT JUST ABOUT OVERINVESTING, THEY BELIEVE, IN THE SUBSCRIPTION BUSINESS, BUT GETTING ITS AD BUSINESS IN THE RIGHT PLACE WHERE I THINK THE BELIEF ON THE PART OF SIRIUS IS THERE’S BEEN AN UNDERINVESTMENT THERE AND THERE'S BEEN OVERALL POOR CAPITAL ALLOCATION BY THIS COMPANY. IF YOU GET SIRIUS WITH THREE BOARD SEATS OUT OF, I THINK WHAT IS IT, 3 OF 9, INCLUDING THAT CHAIRMANSHIP, WHICH IS, I’M TOLD, LIKELY TO BE HELD BY EITHER JIM MEYER, THE CURRENT CEO OF SIRIUS, OR GREG MAFFEI, THE CURRENT CEO OF LIBERTY.

JIM CRAMER: STAND STILL?

FABER: I DON'T KNOW IF THERE IS A STAND STILL. THAT DOESN'T REALLY MATTER.

CRAMER: YEAH, BUT WHY IS THIS STOCK EVEN UP?

FABER: I DON'T KNOW.

CRAMER: IT SHOULD BE DOWN.

FABER: POSSIBLY.

CRAMER: THIS ENDS ANY POSSIBILITY OF A TAKEOVER. THIS IS IT.

FABER: WELL, SIRIUS, LISTEN, SIRIUS WILL TRY TO HAVE ITS BOARD MEMBERS INCLUDING THE CHAIRMANSHIP HELP TO GUIDE THE COMPANY AND PUT IT ON A BETTER PATH, IN THEIR OPINION.

CRAMER: COULD BE LIKE A LIVE NATION –

FABER: THEN LET'S ASSUME THAT WORKS AND THE STOCK PRICE STARTS TO MOVE UP, THESE GUYS CAN OBVIOUSLY EXERCISE, THEY WOULD OWN AS MUCH AS 20% OF THE COMPANY. AND THEN, LIKE SIRIUS AND LIBERTY, LIKE LIBERTY LIKES DO, THEN THEY HAVE THE OPTION POTENTIALLY OF AT ONE POINT OR DOWN THE ROAD BUYING THE COMPANY. BUT THAT’S NOT WHERE THEY ARE RIGHT NOW.

CRAMER: NO. WELL, IT’S FUNNY. I ASKED APPLE REPEATEDLY TO BUY BOTH SIRIUS AND PANDORA. GAME, SET, MATCH. THIS IS A POWERFUL COMBINATION. SIRIUS AND PANDORA. I THINK IT'S A BRILLIANT MOVE BY MAFFEI. BRILLIANT.

FABER: YEAH. THEY REALLY DID. WAITING AND WAITING AND WAITING AND FINALLY GETTING THIS THING.

CRAMER: SO SMART.

FABER: AND INVESTING THE MONEY AT THE LEVEL THEY DID.

CRAMER: THEY GOT IT FOR NOTHING.

FABER: WELL, I DON'T KNOW IF FOR NOTHING. LISTEN, IT'S NOT AS THOUGH THEY AREN’T TAKING RISK. THEY ARE. $480 MILLION. THIS IS, BY THE WAY, I THINK IT IS BEING PAID IN KIND, SO IT ACCRETES UP. THERE'S SOME RISK HERE FOR THEM AS WELL. BUT IT'S A TYPICAL LIBERTY DEAL.

Media contacts

For more information contact:
Jennifer Dauble CNBC t: 201.735.4721 m: 201.615.2787 e: jennifer.dauble@nbcuni.com
Erin Kitzie CNBC t: 201.735.4739 m: 201.753.8107 e: erin.kitzie@nbcuni.com