CALIFORNIA, U.S. - In an all-stock deal valued at $3.5 billion, satellite radio company SiriusXM has announced that it is acquiring the popular music streaming service Pandora.

According to the company, the $3.5 billion all-stock deal will see shareholders receiving 1.44 of newly issued SiriusXM shares for each Pandora share they hold.

It said that Pandora price from this deal is $10.14 a share, or a 13.8 percent premium.

In its press statement, the companies said that the merger agreement includes a "go-shop" provision, adding that the company "may actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals following the execution date of the definitive agreement."

SiriusXM, which is expecting the deal to close in the first quarter of 2019, will become the largest audio entertainment company in the world after the acquisition of Pandora.

Further, the company has said that it is expecting over $7 billion in combined revenue in 2018.

SiriusXM said that the deal will bring together its 36 million subscribers in North America with more than 70 million monthly active users from Pandora.

After the deal was announced, Pandora shares - that have recorded a nearly 90 percent rise over the past year - rose 10.3 percent to $10.03 a share in premarket trading.

However, Sirius stock dropped 0.4 percent to $6.95 a share.

SiriusXM recently signed a partnership with Netflix to create a comedy channel that is slated to launch in January 2019.

The deal that was announced in July this year, is set to see new material from comedians promoted in Netflix original content, who will feature on the comedy channel.