Corvex Management disclosed on Monday that it owns 9.9 percent of Pandora Media, during the internet music streaming company to explore a sale instead of pursuing what it calls a “costly and uncertain business plan.”
Corvex, a hedge fund run by Keith Meister — a protégé of billionaire activist investor Carl Icahn, said it has met with Pandora management and even recently withdrew a plan to replace some of its board members. However, the activist investor now believes Pandora should hire an investment bank to help the company explore its strategic options, namely a sale.
Side note: We’ll have the 1Q15 edition of the quarterly activist newsletter out next week. You can read more about the quarterly newsletter and check out the new discounted pricing here.
Pandora’s shares are down more than 25 percent in 2016 and off more than 45 percent over the last year. Corvex owns about 22.7 million shares in the company, making the hedge fund Pandora’s largest shareholder. Corvex is the same activist hedge fund that pushed Yum! Brands to break itself up.
Now, Pandora co-founder Tim Westergren, a former musician who spearheaded Pandora’s music algorithm technology, returned to the company on March 28 to become CEO, squashing some investors’ hopes the company could be sold.
Corvex’s pressure to sale comes as Pandora is trying to negotiate with record labels for licenses it needs to offer more on-demand music services. Recall, that we put together some analytics on Corvex’s past activist campaigns and they do quite well. Rather, quite well is an understatement, where its activist campaign returns crush the S&P 500 and other activist investors.