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(Reuters) - Pandora Media Inc (P.N) said on Monday that KKR & Co LP (KKR.N) has agreed to invest $150 million in the music streaming service, while the company explores strategic alternatives, including a sale.
The company's shares were up 3.4 percent at $10.75 in extended trading.
Pandora said Richard Sarnoff, KKR's head of media & communications private equity investing in the Americas, will join its board.
"... We have positioned the company to evaluate any potential strategic alternatives, including a sale, in the 30 days before the financing is set to close," board member James Feuille said in a statement.
Pandora has been urged to explore a sale by hedge fund Corvex Management LP, run by activist investor Keith Meister, after it disclosed a 9.9 percent stake in Pandora in May last year.
Pandora also said that Feuille and Peter Gotcher will resign from the board, which is forming an independent committee to identify and appoint new directors.
KKR will purchase $150 million in a new designated Series A convertible preferred stock of Pandora. The offering, which is not expected to close earlier than June 8, may be upsized to a total of $250 million.
Pandora faces stiff competition from services such as Sweden's Spotify, Apple Inc's (AAPL.O) Apple Music, Google's (GOOGL.O) Play Music and Amazon.com Inc's (AMZN.O) Amazon Music Unlimited, which dominate the on-demand music service market.
Centerview Partners LLC and Morgan Stanley will continue to advise the board regarding its review of strategic alternatives, Pandora said.
Reporting by Anya George Tharakan in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel