Acquisitions and Restructurings
|6 Months Ended|
Jun. 30, 2020
(3) Acquisitions and Restructurings
Sirius XM Holdings acquisition of Pandora
On February 1, 2019, Sirius XM Holdings purchased all of the outstanding shares of Pandora Media, Inc. (“Pandora”) for $2.4 billion, by converting each outstanding share of Pandora common stock into 1.44 shares of Sirius XM Holdings common stock and by cancelling Sirius XM Holdings’ investment in Pandora’s preferred stock with a fair value of $524 million, for total consideration of approximately $2.9 billion. Net cash acquired by Sirius XM Holdings was $313 million. Pandora operates an internet-based music discovery platform, offering a personalized experience for listeners.
The table below shows the value of the consideration paid in connection with the acquisition (in millions, except for exchange ratio and price per share of Sirius XM Holdings common stock):
Sirius XM Holdings recognized $7 million and $83 million of costs related to the acquisition of Pandora during the three and six months ended June 30, 2019, respectively.
The amounts of revenue and net loss of Pandora included in Liberty’s condensed consolidated statement of operations since the date of acquisition were $441 million and $56 million, respectively, for the three months ended June 30, 2019 and $692 million and $178 million, respectively, for the six months ended June 30, 2019.
The unaudited pro forma revenue and net earnings of Liberty, prepared utilizing the historical financial statements of Pandora, giving effect to acquisition accounting related adjustments made at the time of acquisition, as if the acquisition of Pandora discussed above occurred on January 1, 2019, are as follows:
The pro forma results primarily include adjustments related to the amortization of acquired intangible assets, depreciation of property and equipment, acquisition costs, fair value gain or loss on the Pandora investment and associated tax impacts. The pro forma information is not representative of the Company’s future results of operations nor does it reflect what the Company’s results of operations would have been if the acquisition of Pandora had occurred previously and the Company consolidated Pandora during the entirety of the period presented.
Sirius XM Holdings acquisition of Simplecast
On June 16, 2020, Sirius XM Holdings acquired Simplecast for $28 million in cash. Simplecast is a podcast management and analytics platform. In connection with the acquisition, Sirius XM Holdings recognized goodwill of $17 million, intangible assets subject to amortization of $12 million, other assets of less than $1 million and deferred income tax liabilities of $1 million.
Sirius XM Holdings restructuring of Automatic Labs
In May 2020, Sirius XM Holdings terminated the Automatic Labs Inc. ("Automatic") service, which was part of its connected services business. During the three and six months ended June 30, 2020, Sirius XM Holdings recorded $24 million of restructuring expenses related to the termination of the service. The termination of the Automatic service does not meet the requirements to be reported as a discontinued operation because the termination of the service does not represent a strategic shift that will have a major effect on our operations and financial results.
Sirius XM Holdings acquisition of Stitcher
On July 13, 2020, Sirius XM Holdings entered into an agreement with The E.W. Scripps Company (“Scripps”) and certain of its subsidiaries to acquire the assets of Stitcher, a pioneer in podcast production, distribution, and ad sales. Under the terms of the asset purchase agreement, at the closing, Sirius XM Holdings will make a cash payment of $265 million to Scripps. The agreement provides that Sirius XM Holdings will potentially make up to $60 million in additional contingent payments based on Stitcher achieving certain financial metrics in 2020 and 2021. The transaction is expected to close in the third quarter of 2020, subject to receipt of required regulatory approvals and the satisfaction of other customary closing conditions.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef