SiriusXM had been in talks to purchase Pandora, and then they bought a $480 million stake in the company. Now, the satellite radio company has officially acquired Pandora for $3.5 billion. Via Reuters:

Satellite radio company Sirius XM Holdings Inc (SIRI.O) will buy online music service Pandora Media Inc (P.N) in a $3.5 billion all-stock deal that will help it battle growing competition from streaming rivals Spotify and Apple Music.

Sirius XM, controlled by media mogul John Malone’s Liberty Media Corp (FWONA.O), has built a name supplying more than 175 channels to car drivers, but has largely trailed Pandora, Spotify Technology SA (SPOT.N) and Apple (AAPL.O) in mobile and streaming content.

Monday’s deal gives the pair a market value of about $34 billion, topping Spotify’s $31.2 billion and follows through on Sirius’ purchase of a 15 percent preferred-stock stake in Pandora for $480 million last year.

“We view the read through to Spotify as slightly negative as it could face a stronger competitor in the U.S. while at the same time one of the only large swaths of ad-supported listeners in the fast-maturing U.S. goes off the market,” SunTrust analyst Matthew Thornton said.

[...] “SIRI cannot offer on-demand radio, and cannot offer customization, and Pandora offers both,” said Michael Pachter, an analyst with Wedbush Securities in Los Angeles.

“Sirius can merge Pandora’s radio business into its satellite subscription business, and can also begin to offer on-demand to its large installed base of satellite subscribers.”

In another effort to compete with Spotify earlier this year, Pandora launched personalized playlists to compete with what Pandora's Chief Product Officer Chris Phillips called "generic buckets of music."