Pandora Surges to Record After Pricing Expanded OfferingAndy Fixmer
Pandora Media Inc., the biggest Web radio service, rose to a record yesterday after pricing an expanded stock offering that will finance plans to compete with radio stations for advertisers.
Pandora advanced 6.7 percent to $27.35 at the close in New York, the highest price since the company first sold shares in June 2011. The stock has almost tripled this year. Pandora, based in Oakland, California, said yesterday it will sell 13 million shares at $25 each, up from 10 million planned earlier.
With the sale, Pandora is raising an estimated $312.9 million, according to a regulatory filing, amid plans to open sales offices and challenge radio stations for $15 billion in local U.S. advertising. Last week Pandora named digital ad veteran Brian McAndrews as chairman and chief executive officer.
The sum raised could increase to $378.8 million if underwriters including JPMorgan Chase & Co. and Morgan Stanley exercise a 30-day option to purchase 2.73 million more shares, up from 2.1 million originally. The offering is expected to close on Sept. 24, Pandora said.
Crosslink Capital Inc., the company’s biggest shareholder, is selling 5.2 million shares in the offering, up from the 4 million initially proposed.
Some proceeds may be used for acquisitions and new technology, according to the prospectus. Pandora said in a Sept. 16 prospectus that the stock sale would generate $231 million to $280 million, depending on the over-allotment.
Songza and Raditaz, both closely held music applications, are possible acquisition targets, Rich Tullo, an analyst at Albert Fried & Co., wrote in a Sept. 16 report. Pandora could also purchase businesses to build its ad-selling platform and expand into films and books, he said.