Pandora is falling after its most likely buyer dismissed acquisition rumours --  and criticised its new direction

Tim WestergrenLarry Busacca/Getty Images for Columbia RecordsPandora founder and CEO Tim Westergren.

Internet radio pioneer Pandora tumbled more than 5% in trading on Friday after a Sirius XM exec threw cold water on rumours that the radio giant might acquire the company.

For months, Pandora has endured on-and-off rumours that it’s trying to sell itself, and satellite radio powerhouse Sirius XM has been floated as the main suitor.

But, unfortunately for Pandora, Sirius XM doesn’t appear to be interested.

“With respect to all the chatter about acquisitions, you have to look at them as sort of being not very likely,” Sirius CFO David Frear said Thursday (after market close) at a Citi conference in Las Vegas, as noted by TheStreet.

This is bad news for investors hoping for a sale.

In December, Pandora jumped over 16% after CNBC reported that Pandora was “open to engaging in talks with longtime suitor SiriusXM,”

Sirius XM had reportedly made an informal offer to buy Pandora in 2016 this year for $15 per share (Pandora is currently trading at around $12.25 per share). That offer valued the company at over $3.4 billion, according to the Wall Street Journal.

Pandora is a company in transition, on the brink of launching an on-demand product to compete with the likes of Spotify and Apple Music. That product had been shown around to press and investors, and is scheduled to arrive early this year.

On Thursday, Frear seemed pessimistic about the chances of that product succeeding. “And you know on the Pandora front, they have got a big change in strategy with this move into the interactive sort of music business, which we’ve been public in our doubts about it,” he said. “And we’ll see how that strategy plays out for them.”

Would anyone else be interested in buying Pandora?

In September, SunTrust analyst Robert S. Peck explored who the potential buyers for Pandora would be. Here’s what he came up with at the time:

  • Liberty Media/SiriusXM: “Liberty’s CEO has been reported by CNBC to have acknowledged the benefits of a P/Sirius merger and was reported by the Wall Street Journal to have made an informal $15 offer for P. Liberty Media is 65% owner of Sirius XM. Further, P’s activist shareholder has publicly endorsed a tie-up between P and Liberty/SiriusXM.”
  • Spotify: “A potential merger of Spotify and Pandora has also been discussed in the press, including Forbes. We believe synergies would be substantial as it relates to product development, marketing, salesforce, content delivery, royalty tracking/reporting, back office, demographics, data, local, in-auto, upsell, and programmatic. A reverse merger could provide Spotify an alternative to an IPO and a liquidity event for its investors.”
  • Others: “The suitors that make most sense to us are mobile-first and acquisitive with an ad business and amenable to an inside plus feet-on-the-street salesforce model. We believe this includes Verizon and to a lesser extent AT&T.”

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