Pandora Investor Calls For Sale

Pandora’s biggest investor is tired of watching the company’s stock slide, and a letter written by its managing partner vents frustration in a way that suggests the Internet music streamer that recently acquired Ticketfly could soon be on the shopping block.

Corvex Management MP Keith Meister’s missive appears to have given Pandora stock a shot of adrenaline, though – shares spiked from $9.98 the morning of May 16 to as much as $10.77 a few hours later. Meister expressed concern that Pandora is “pursuing a costly and uncertain business plan, without a thorough evaluation of all shareholder value-maximizing alternatives.”

He also pointed to “questionable capital allocation decisions … including the rich price paid for the TicketFly acquisition.” Pandora acquired Ticketfly for approximately $450 million in October. Against a backdrop of sinking Pandora share price and market capitalization, CEO Brian McAndrews jumped ship in March and was replaced by founder Tim Westergren.

That executive shuffle does not mollify Corvex, apparently. Meister, in his letter addressed to Pandora’s board of directors, calls out Westergren for not buying Pandora stock himself, chiding him for owning a paltry 1.8 percent of the business he founded. Giving the stab a little twist, Meister further writes that Corvex is “surprised” that Westergren was even named CEO following the departure of McAndrews, according to Music Business Worldwide.

The firm says it was not consulted about the appointment of Westergren and that his recent statements “suggest an unwillingness to consider a sale regardless of the price offered to shareholders or the cost and uncertainty inherent in a standalone business plan.”

On behalf of Corvex, Meister urges Pandora to “immediately engage an independent investment bank with a fresh perspective … to advice on a value maximization process – including the execution of a sales process.” Corvex is Pandora’s largest investor with just shy of a 10 percent interest. The letter says Pandora “can become an even more differentiated product and a more valuable business as part of a larger enterprise,” adding, “Given the declines in equity value shareholders of Pandora have suffered in recent years, there is reason for concern about the future.

“We believe now is a time to thoroughly evaluate all options with objectivity and an open mind, not a time to zealously pursue a single path,” the letter says.