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Pandora hits back at investment fund that’s seeking access to Sirius deal documents

By | Published on Tuesday 5 February 2019


Pandora has asked a US court to knock back an investment fund’s request to access documents relating to Sirius XM’s acquisition of the streaming music firm, which was completed last week.

Investment outfit The Arbitrage Fund went to court on Thursday requesting access to various documents that it said it needed to see in order to properly investigate Sirius’s purchase of Pandora. The deal, the investment fund alleges, was a “flawed” merger process with terms that were unfavourable to Pandora’s investors.

Sirius first announced its plan to takeover Pandora via an all-stock transaction last September, it having previously bought a stake in the streaming music business in 2017.

Last week it was confirmed that Pandora’s shareholders had now approved that deal and that “each share of Pandora common stock will be converted into 1.44 newly issued shares of Sirius XM common stock”. But it seems that not every shareholder is entirely happy with the transaction.

According to Law 360, Arbitrage said in a court filing last week that it appears as if Pandora’s board “made negligible efforts to seek out competing bids during the 30-day ‘go-shop’ period”. And also that Sirius “effectively assumed control over the board” and “embedded a conflicted financial advisor within the deal negotiation process and improperly pushed the company towards unfavourable deal term”.

The fund then notes that, since last September, Sirius’s own share price has dipped, which is relevant in a deal that involved an exchange of stock. It then speculates that said deal was “driven by the conflicting interests of the company’s directors and/or officers, as well as the conflicted financial advisor Pandora engaged to evaluate a potential transaction”.

Pandora hit back in its own court filing over the weekend. It denied all the allegations made by the investment fund, while adding that Arbitrage should not be entitled to see the documents it seeks because its request was too broad and did not cite a proper purpose for accessing the files.

We now await to see how the court responds.