Shares of Pandora are up almost four per cent in after-hours trading, after an activist investor launched a campaign to force the company to put itself up for sale.
In a letter addressed to Pandora’s board of directors filed on Monday, Corvex Management’s Keith Meister claims that his firm owns 9.9% of the company’s stock, and expresses concerns “the company has been unable to date to translate its great product into a great business with an attractive public market valuation.”
With Pandora’s share price sagging, with big spending on acquisitions like TicketFly, and without a clear plan to growing the core internet radio business, Pandora “may be pursuing a costly and uncertain business plan,” writes Meister.
He urges Pandora to hire an outside bank to explore a “value maximization process” that could include a sale.
Here’s the important part:
We have become increasingly concerned that the company may be pursuing a costly and uncertain business plan, without a thorough evaluation of all shareholder value-maximizing alternatives. For the reasons set forth below, we urge the company to immediately engage an independent investment bank with a fresh perspective and without any prior history of advising the company to advise on a value maximization process — including the execution of a sales process — and to evaluate the results against other options including the risk-adjusted value of continuing to operate on a standalone basis.
It’s been a tough stretch for Pandora: It hasn’t been profitable since its 2011 debut on the public markets. And when Pandora cofounder Tim Westergren came on as CEO in a turnaround play, the stock tanked. All the while, competitors like Spotify, Apple Music, and Google Play are getting more competitive by the day.
Pandora did not immediately respond to a request for comment.