Corvex discloses large Pandora stake, pushes for sale-letter

Mon May 16, 2016 10:40pm EDT
 
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By Liana B. Baker

(Reuters) - Corvex Management LP disclosed on Monday that it owns 9.9 percent of Pandora Media Inc and urged the internet music streaming company to explore a sale instead of pursuing a "costly and uncertain business plan."

Corvex, a hedge fund run by Keith Meister, a protégé of billionaire activist investor Carl Icahn, said it had met with the company's management and had withdrawn a plan to replace some of its board members. However, it now believes Pandora should hire an investment bank to help the company explore its strategic options including a sale.

"We believe there is likely to be significant strategic interest in the company at a substantial premium to the company's recent stock price," Corvex said, adding that large internet companies, handset makers and media companies could be potential buyers.

Pandora's shares are down more than 25 percent in 2016 and more than 45 percent year-over-year. Corvex owns about 22.7 million shares in the company, making the hedge fund Pandora's largest shareholder.

Pandora said in response that it is in constant dialogue with shareholders and committed to achieving long-term value for them.

"Pandora has a profitable core business, combined with a strong balance sheet. We are confidently investing to fully capture the massive opportunity ahead of us," the company said in a statement.

Oakland, California-based Pandora has faced tough competition from music-streaming rivals such as Spotify, Apple Inc , Alphabet Inc's Google and Amazon.com and has failed to turn an annual profit as a public company.

Analysts have said Pandora, which had a market capitalization of $2.29 billion on Monday, could be an acquisition target for larger media or internet companies looking to beef up their online music offerings.   Continued...

 
Keith Meister, founder and chief investment officer at Corvex Management LP., speaks during the Sohn Investment Conference in New York May 4, 2015. REUTERS/Brendan McDermid