Here's why Pandora is up for sale -- and why it hasn't sold yet

Pandora Radio reportedly rejected an acquisition offer Thursday that valued the music streaming company at $3.4 billion dollars.

Pandora thinks it's worth more than that — $20 a share, where it hovered earlier this year, rather than the $15 a share that determined a $3.4 billion value.

But it's still seeking a buyer.

News first broke that the music service was up for sale in February, when it hired Morgan Stanley to explore its options.

Sale rumors have swirled around Pandora ever since, but the company has been unable to find a suitor that it sees eye-to-eye with on price.

One reason for that gap is the copmany's dismal earnings. A lot of people listen to Pandora, but it has been slowly bleeding listeners and shown a propensity for disappointing investors' expectations on how much money the company brings in.

On Thursday, Pandora announced that it had missed revenue predictions. Its shares fell 6.7 percent in after-hours trading.

Faced with competitors like Spotify and Tidal that operate on a model based more on subscriptions than advertising, Pandora had begun buying other companies like Ticketfly and Rdio, another streaming service, in a bid to find new ways to make money.

It also brought back its founder Tim Westergren as CEO as part of an effort to develop a new product more similar to Spotify and Apple Music.

Around the same time, one of the company's major investors started a public push to force the company to sell.

"Simply put, we believe Pandora can become an even more differentiated product and a more valuable business as a part of a larger enterprise," Keith Meister of the hedge fund Corvex Management wrote in a letter to the company in May.

Pandora declined to comment on the acquisition rumors.

A few months later, Pandora has taken that advice to heart. Its offer on Thursday came from Liberty Media CEO Greg Maffei, who is already involved in the music industry through SiriusXM Radio, which his company controls. Pandora has also invited interest from Apple and Amazon, the Wall Street Journal reported.

As tastes in music streaming change, Pandora is not sure if it can evolve without the support of a big-time buyer. Even its rebuffed investor — who reportedly proposed merging Pandora with SiriusXM — isn't so sure.

“We have looked at the business models on a bunch of the streaming companies and found it very hard to see them [as] attractive,” Maffei said earlier this year, according to the Wall Street Journal.

Pandora's hoping other investors will still see it as attractive — and more attractive than $3.4 billion.

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