Pandora Media Inc. P, the world's largest Internet radio operator, on Thursday announced it was postponing the closing period for a $150 million minority investment by private equity firm KKR & Co. (KKR - Get Report) so it can explore interest expressed by a "strategic investor" seeking to make a "substantial" minority investment in the web radio company. 

Pandora shares experienced a steep decline this week and were down slightly on the news, as many investors had been expecting the web-radio company to strike a deal to sell itself.

Specifically, Pandora said that KKR and it agreed to postpone the deadline to close the transaction to an undisclosed time. The KKR deal, which was announced in May, was set to close Thursday, June 8. The move comes after reports suggesting that Pandora is in talks with Sirius XM Holdings (SIRI - Get Report) for an equity investment after merger negotiations ending in a disagreement over price. 

A deal with Sirius XM would likely nullify the KKR transaction.

By accepting KKR's money in exchange for preferred shares, Pandora CEO Tim Westergren would signal that he had exhausted efforts to entice a would-be buyer such Verizon Communications Inc. VZ, which may also have interest in the streaming music operator. With a large Sirius XM or KKR investment, Pandora could continue to operate as a standalone company further into the future, even unprofitably, without as much pressure to do a deal.

In any event, either a KKR or Sirius XM investment suggests that the company has defeated, for now, activist investor Corvex Management's Keith Meister, who had been pushing for the web-radio company to consider selling itself.


Corvex's Keith Meister
Corvex's Keith Meister

Pandora had accepted the large KKR capital infusion on May 8, the date of a deadline for shareholders to nominate dissident director candidates. No public director battle was announced that day, even though Corvex often launched director-battles to push its agenda. 

Activist defense attorneys and proxy solicitors contend that the buyout shop's investment in Pandora may represent a "white squire" defense tactic intended to fend off activists. The idea behind white squire investments is for a buyout shop to come in and invest in a large voting bloc that comes with a longer-term or at least more management-friendly investment horizon than what an activist is seeking.

With Corvex out of the picture, Pandora could negotiate a large minority investment - either with KKR or XM Sirius -- rather than deal to sell itself.

-- Leon Lazaroff contributed to this article