Pandora acquires key assets worth $75 million from Rdio as the latter files for bankruptcy. The deal is expected to finalize in the first quarter next year.
As Rdio files for bankruptcy, music streaming service Pandora announced on Monday that it’ll be acquiring “key assets” from Rdio to strengthen its position against rivals Apple and Spotify.
Pandora has agreed to pay $75 million to buy Rdio technology and talent, though added it was not buying the company’s business.
“Whether streaming through radio, on-demand or in-person at live events, Pandora is building the definitive source for fans to discover and celebrate music.We are defining the next chapter of Pandora’s growth story,” said Pandora’s chief executive Brian McAndrews.
He feels that with this move, Pandora is in a stronger position to compete against the likes of Spotify and Apple Music. Moreover, by acquiring Rdio’s key assets that include technology and people, Pandora is planning to introduce its own ‘upper tier offerings’ that will further compliment Pandora One.
“Adding live music experiences through Ticketfly was a transformative step. Adding Rdio’s impressive technology and talented people will fast-track new dimensions and enhancements to our service. I couldn’t be more optimistic about Pandora’s future and the future of music,” added McAndrews.
Shares in Pandora went down by 0.15 percent closing at $13.42 in regular trading, but did fall another 0.50 percent in the after-hours trading. The acquisition deal is expected to finalize in the first quarter of 2016. Pandora tried to be evasive about the fact that it’s buying assets from a company going bankrupt and further insists that it’s in a “much better position” than Rdio in using those assets to create a better music streaming service. The company already has some 78 million users, most of which are in the U.S.
The move comes as Rdio announced that it was opting for bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of California. Hence, Pandora will essentially be getting technology, intellectual property, product and people from Rdio. A substantial number of Rdio’s employees will now work for Pandora, though some of them have been laid-off.
Rdio was founded back in 2010, whose service was available in 60 markets across the globe offering on-demand access to over 12 million songs. The company has raised $125.7 million in funding from investors which include Atomico, Skype, Mangrove Capital Partners, and famed entrepreneur Janus Friis. Moreover in October 2014, the company’s parent entity, Pulser Media, also raised $108 million to fund Rdio. Though despite that, Rdio could not compete against Spotify and other music streaming services. It is also worth pointing out that when Apple entered the music streaming service, Rdio sent a note to the Cupertino giant some part of which read “Welcome, Apple. Seriously.”