SiriusXM (SIRI -6.46%) agreed to acquire Pandora Media (P) for $3.5 billion in late September. That deal gave Pandora shareholders a 13.8% premium over the 30-day average of where the companies' shares had been trading.
Pandora Media shares jumped after the deal was announced, but they fell throughout October. That's likely because Pandora had a "go-shop" provision in the deal, allowing it to try to find a better deal.
The provision created uncertainty, as the company was not obligated to disclose if it was in negotiations with another party. That period ended on Oct. 24, and Pandora released a statement saying that its deal with SiriusXM would go through:
Pandora has concluded its discussions with other parties about an alternative transaction pursuant to the "go-shop," and the Pandora Board of Directors continues to recommend the SiriusXM acquisition as fair to and in the best interest of Pandora's stockholders. Pandora is now subject to customary "no-shop" provisions that limit its ability to solicit alternative acquisition proposals, subject to customary "fiduciary out" provisions.
Stock in the company had been down from the highs reached when the sale was announced, but it recovered somewhat after Pandora ended the "go-shop" period without finding a better deal.
Generally, share prices in a company that has agreed to be acquired trade around the acquisition price. That can vary in deals where regulatory approval may scuttle the sale, but that does not appear to be an issue here.
So it's odd that Pandora shares have not recovered to something close to the acquisition price. After closing September at $9.51, shares finished October at $8.50, a 10% drop, according to data provided by S&P Global Market Intelligence.
Pandora's share price has continued to trade below the deal price in November, suggesting that investors think there's a possibility it won't go through. SiriusXM has said that it expects the deal to close in the first quarter of 2019, and has raised no concerns about the deal falling through or meeting any regulatory hurdles.