Corvex Management disclosed on Monday that it owns 9.9 percent of Pandora Media Inc and urged the internet music streaming company to explore a sale.
Corvex is run by Keith Meister, a protégé of billionaire activist investor Carl Icahn, and said in the letter to Pandora’s board that it had been meeting with the company’s management in recent months. It had withdrawn a plan to replace members of its board but said it now believes Pandora should hire an investment bank to help the company explore its strategic options including a sale.
“We have become increasingly concerned that the company may be pursuing a costly and uncertain business plan…,” Corvex said. “It remains our firm belief that the company should immediately explore the potential value to shareholders that could be realized in a sale transaction.
Corvex owns about 22.7 million shares in the company, making it the largest shareholder.
Pandora did not immediately respond to a request for comment Monday regarding Corvex’s letter.
Oakland, California-based Pandora has faced tough competition from music-streaming rivals such as Spotify, Apple Inc , Alphabet Inc’s Google and Amazon.com and has failed to turn an annual profit as a public company. Its shares are down more than 25 percent this year.
Analysts have said Pandora, which had a market capitalization of $2.29 billion on Monday, could be an acquisition target for larger media or Internet companies looking to beef up their online music offerings.
Pandora co-founder Tim Westergren, a former musician who spearheaded Pandora’s music algorithm technology, returned to the company March 28, squashing some investors’ hopes the company could be sold.
Westergren told Reuters on April 15, “If you want to sell a company, you don’t do that by spending half a billion on acquisitions and hiring a new CEO.”
Unlike other streaming services, which have negotiated deals with record labels to allow listeners to pick songs, Pandora has acted more like a radio station, delivering a stream of songs that match a genre or artist but not allowing customers to make specific selections.
As on-demand services catch on, Pandora is now playing catch-up and negotiating with record labels for the licenses it needs to offer such a service.
(additional reporting by Julia Love in San Francisco; Editing by Cynthia Osterman)